ASIA COPPER WEEK 2018: Chinese presence in copper futures market ‘is growing’

China’s presence and influence in the copper futures market is growing, reflected in the significant increase in the number of copper transactions conducted by Chinese participants across major exchanges over the past two years, representatives of major bourses told delegates at Asia Copper Week in Shanghai.

Around 25% of copper transactions on the London Metal Exchange are either done by Chinese participants or are for Chinese brands of metal, Liu Yang, head of corporate sales and China business development for the LME, said during a panel discussion here on Wednesday November 14. 

In recent years, Chinese market participants have proved ambitious about trading futures, Liu added.

Hedge demand had increased over the past two years largely because of fluctuation in prices both in the physical market and in futures, the result of Chinese supply disruptions caused by environmental inspections as well as strikes at major producers elsewhere in the world.

LME prices have traded in volatile fashion in a wide range from slightly below $5,000 to $7,200 per tonne since the start of last year, while spot prices in China have fluctuated in a range of 45,000-55,000 yuan.

This opinion was echoed by Wanwan Ge, senior manager at the Shanghai Futures Exchange – daily trading copper volumes on the SHFE have averaged 214,600 lots per day over the same period, he said.

Demand for copper options on the SHFE is set to increase further, building on active trading of those options already, Wanwan said.

As of Friday November 9, there have been 3.3 billion yuan ($473 million) of trades at an average of 12,000 lots per day since the exchange introduced the copper options on September 21.

What to read next
Chinese authorities officially announced that they will be expanding the range of permitted recycled copper and aluminium imports from mid-November, but market participants Fastmarkets spoke to at a conference this week are not convinced that this will mean more material will be imported into the country in the short run.
Li-Cycle announced on Thursday October 31 that it had entered an agreement with Glencore to sell 100% of the premium nickel-cobalt mixed hydroxide precipitate (MHP) production at its stalled hub in Rochester, New York – a step that could support Li-Cycle’s efforts to finalize a loan with the US Department of Energy (DOE).
Unprecedented supply tightness and record low treatment and refining charges (TC/RCs) are likely to challenge copper smelters in 2025 – even more than in 2024, sources told Fastmarkets.
The publication of Fastmarkets’ MB-PB-0086 lead 99.99% ingot premium, cif India and MB-PB-0087 lead 99.97% ingot premium, cif India assessments for Tuesday November 5 were delayed due to a reporter error.
Quarterly figures released by global miner Glencore on Wednesday October 30 showed that zinc concentrate output was dropping in a tight market while overall nickel output was down despite an increase in briquettes.
On Thursday October 24, the US Department of Treasury and the Internal Revenue Service (IRS) released the final rules regarding the Section 45X credits under the US Internal Revenues Code. The final rules clarify definitions and confirm credit amounts for eligible components, including solar and wind energy, inverters, qualifying battery components and applicable critical minerals. […]