# Copper - General discussion



## Investor123

Generally I classified copper into three phrases:
Early part of the year, Mid year, and Late part of the year.

*Early part of the year* => Customers start to order copper for their production, hence we often see copper price rising the uptrend during this period.

That is the time to buy copper futures.

*Mid-year* => This period is when copper tends to trade sideways. Price of copper relies on the supply side situation. 

Supply disruption can be caused by earthquakes in Chile, strike by the miner. In events like this copper producer may have difficulties in fulfilling the demand, thereby pushing copper price higher. However when the strikes are over, or analysts perceive the copper is overpriced by the market, price will fall.

Traders need to identify where is the range of this sideways trading. Then buy at the bottom of the range, and short sell at the peak of the range.

*Late part of the year* => Towards September or early October, customers will stop ordering new supply of copper, and utilised the remaining copper stocks in their warehouse. This is the period whereby price will be on the downtrend.

That is the time to short sell copper futures.

Currently we are in the mid year, hence I expect copper to trade in sideways. I had identified the range to between $7100 to $8800. Today copper is trading at $7668 per metric ton, which is at the lower end of the range, I expect copper price to rise over the next few weeks.


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## Investor123

*Time to buy Copper *

In my article "Life Cycle of Copper", I mentioned that we are in the Mid-Year phrase of copper. During this phrase copper tends to trade sideways. Price of copper relies on the supply side situation. 

Traders need to identify where is the range of this sideways trading. Then buy at the bottom of the range, and short sell at the peak of the range.

In my view the bottom of the range is around 7000 level and peak of the range is around 8000 level. Currently LME Copper is trading at 7245, rebounding from the support level of 7140. I think its time to buy and ride back up into the range.

But I can only afford to trade Comex mini Copper.

Bought 1 lot of Comex mini Copper Dec08 at 3.268
Stop level at 3.193
Target level at 3.400
Value of 1 point is US$12500


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## Investor123

Today copper price rises to 3.300, so unrealised profit is US$400.

I expect copper to trade in a range over the next few weeks because crashing down in October, which is the down season for copper.


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## Investor123

On 2nd September I had bought 1 lot of Comex mini Copper Dec08 at 3.268, stop level at 3.193, target level at 3.400. 

Today copper price rises to 3.347, so unrealised profit is US$987.50.
Value of $1 equals to US$12,500.

I expect copper to trade in a range over the next few weeks because crashing down in October, which is the down season for copper.


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## Investor123

On 2nd September I had bought 1 lot of Comex mini Copper Dec08 at 3.268, stop level at 3.193, target level at 3.400. 

Due to strengthing of US dollar, commodities price across the board plunged. Copper price went below 3.193, so my trade was stopped out.


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## Investor123

*Advising on Hedging was my Job*

When I was a commodities specialist in a bank, a lot of my friends thought that most of my customers had bought commodities to tap on the commodity supercycle. 

Actually that is not true; more than 70% of the customers then was hedgers and only 30% are speculators. 

This is the same reason why our commodity desk was very profitable then. 

Why?

If the customer is a speculator, most likely he is trading 1 - 5 lots of copper. The customer knows that trading futures is risky, so he is trading within his means. While for an institution in a manufacturing or physical trading business, he will be trading 40 - 100 lots of copper to hedge his physical positions. 

In addition, since futures trading is a speculative activity, over time the losers will be gone and only the winners stay. So this speculative group of customers will become smaller over time. But in hedging, the same customers will come again, because as long as their business is running, they will need to hedge for risk management purposes. As good words spread of this team, most hedgers will come in. 

The knowledge of hedging and risk management was very crucial in my job then. Here was a common senario from a corporate customer (hedger):

The customer called me and told me that:

He had bought 2000 metric tons of copper from his supplier based on September average price, delivery in early October. 

At the same time, he had already sold 500 metric tons at $7300 to a customer, delivery in mid October. If price rises higher in mid October, he does not want to miss the opportunity on the price appreciation.

He asked me what should he do to hedge his risk.

i) Current price of copper was trading $7000
ii) September average price is unknown, we will only know the price at the close of September trading day (30th September).
iii) Contract size for 1 lot of LME Copper is 25 metric tons of copper (LME represents London Metal Exchange)

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My answer to my customer would be:

a) Since he had bought 2000 mt of copper from his supplier based on September average price, he should short the same amount of contract size in the futures market. This would mean short 2000 / 25 = 80 lots of copper futures.

By 1 October, the customer will have a short position on 80 lots of copper futures at September average price. At the same time the customer had fixed the cost of his physical copper at September average price. So this physical trade is hedged. 


b) The customer also mentioned that he had sold 500 metric tons at $7300 to a customer. To hedge his risk, he should buy copper futures at market rate based on the same contract size, which is 500 / 25 = 20 lots of copper futures. 

In the event that copper price raises to $7700 by mid October which is the delivery date, he should have profited 7700 - 7000 = 700 x 25 = US$17,500 from the futures market. 

At the same time he lost the opportunity to sell his phyical good at higher price of 7700, opportunity loss is 7700 - 7300 = 400 x 25 = US$10,000. So this physical trade is hedged as well.


Rising commodities price can reduce profit margin of your business. Hedging is a strategy designed to minimize exposure to an unwanted business risk.


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## michael_selway

Investor123 said:


> *Advising on Hedging was my Job*
> 
> When I was a commodities specialist in a bank, a lot of my friends thought that most of my customers had bought commodities to tap on the commodity supercycle.
> 
> Actually that is not true; more than 70% of the customers then was hedgers and only 30% are speculators.
> 
> This is the same reason why our commodity desk was very profitable then.
> 
> Why?
> 
> If the customer is a speculator, most likely he is trading 1 - 5 lots of copper. The customer knows that trading futures is risky, so he is trading within his means. While for an institution in a manufacturing or physical trading business, he will be trading 40 - 100 lots of copper to hedge his physical positions.
> 
> In addition, since futures trading is a speculative activity, over time the losers will be gone and only the winners stay. So this speculative group of customers will become smaller over time. But in hedging, the same customers will come again, because as long as their business is running, they will need to hedge for risk management purposes. As good words spread of this team, most hedgers will come in.
> 
> The knowledge of hedging and risk management was very crucial in my job then. Here was a common senario from a corporate customer (hedger):
> 
> The customer called me and told me that:
> 
> He had bought 2000 metric tons of copper from his supplier based on September average price, delivery in early October.
> 
> At the same time, he had already sold 500 metric tons at $7300 to a customer, delivery in mid October. If price rises higher in mid October, he does not want to miss the opportunity on the price appreciation.
> 
> He asked me what should he do to hedge his risk.
> 
> i) Current price of copper was trading $7000
> ii) September average price is unknown, we will only know the price at the close of September trading day (30th September).
> iii) Contract size for 1 lot of LME Copper is 25 metric tons of copper (LME represents London Metal Exchange)
> 
> -------------------------------------------------------------------------
> 
> My answer to my customer would be:
> 
> a) Since he had bought 2000 mt of copper from his supplier based on September average price, he should short the same amount of contract size in the futures market. This would mean short 2000 / 25 = 80 lots of copper futures.
> 
> By 1 October, the customer will have a short position on 80 lots of copper futures at September average price. At the same time the customer had fixed the cost of his physical copper at September average price. So this physical trade is hedged.
> 
> 
> b) The customer also mentioned that he had sold 500 metric tons at $7300 to a customer. To hedge his risk, he should buy copper futures at market rate based on the same contract size, which is 500 / 25 = 20 lots of copper futures.
> 
> In the event that copper price raises to $7700 by mid October which is the delivery date, he should have profited 7700 - 7000 = 700 x 25 = US$17,500 from the futures market.
> 
> At the same time he lost the opportunity to sell his phyical good at higher price of 7700, opportunity loss is 7700 - 7300 = 400 x 25 = US$10,000. So this physical trade is hedged as well.
> 
> 
> Rising commodities price can reduce profit margin of your business. Hedging is a strategy designed to minimize exposure to an unwanted business risk.




Hi Investor, just wondering, do you have a plan for those who want to buy commodities  MT/LT? that is hold for at least a year?

Its so we dont have to monitor the daily movements, as we are busy with our daily jobs etc 







thx

MS


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## Investor123

Hi Michael,

To hold commodities on a long term period, you can consider investing into ETFs.

You can buy ETFs in US and UK, here are some of the examples:

Agriculture ETF:
http://finance.google.com/finance?q=DBA

Oil ETF:
http://finance.google.com/finance?q=OIL&hl=en

Base Metal ETF: 
http://finance.google.com/finance?q=AMEX:DBB&hl=en

Gold ETF: 
http://finance.google.com/finance?q=GLD&hl=en

Silver ETF:
http://finance.google.com/finance?q=SLV&hl=en

Copper ETF:
http://etf.stock-encyclopedia.com/COPA-LSE.html


If you do not like the idea of ETFs, then buy the King of Commodities: BHP Billiton.


But I think USD is going to appreciate further and this is bad for commodities.

In the current environment, Europe, UK, Australia, New Zealand are likely to cut interest rate, while US is already done with its cut. So base on interest rate differentiate, USD will appreciates against EUR, GBP, AUD, NZD.

If you agree with me on the USD strength, then I would advise you not to buy into commodities ETFs first.


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## Bushman

I was wondering if anyone knows which ASX-listed copper producer has the lowest cash cost operation? 

I personally feel housing will bottom over the next six-month and that might spell good things for copper prices in 2010. Off course, my 2c only.


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## Phillip

I trade copper futures CFD's quite regularly. 

I only trade commodities long an short.

Here's some news.

NEW YORK/LONDON, Feb 6 (Reuters) - Copper jumped over 8 

percent on Friday, with the price in New York closing at its 

highest level since early December, as economic recovery hopes in 

China, the world's largest red metal consumer, fueled the 

aggressive rally. 

    Copper for March delivery <HGH9> on the New York Mercantile 

Exchange's COMEX division jumped 12.85 cents, or 8.6 percent, to 

settle at $1.6285 a lb -- its loftiest level on a closing basis 

since December 1. 

    "The bias is definitely up for now," said Tom Hartman, broker 

with Altavest Worldwide Trading in Mission Viejo, California. 

"There's optimism that stimulus packages in the U.S. and domestic 

spending in China are going to help some commodity sectors recover 

a little bit early." 

    Three-month copper <MCU3> on the London Metal Exchange settled 

up $211 at $3,540 a tonne. After the close, it rallied as much as 

8.3 percent to $3,605. 

    "I think the Chinese have come back from their New Year 

celebration with budgets in hand, and they're busy spending that," 

said John Meyer, head of resources at Fairfax investment bank, 

adding that both Chinese buying and the anticipation of buying was 

helping the market climb.


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## kransky

but stock levels are still rising...


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## Phillip

kransky said:


> but stock levels are still rising...
> 
> 
> 
> They are soaring not rising, it all depends on China and whether they shall seek to replenish their warehouse due to the stimulus package they have put forward. Let us not forget copper started to fall when inventories were at record lows. Although inventories are the main catalyst to future commodity asset prices; they are still historical.
Click to expand...


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## quinn123

The COMEX copper stocks have been increasing since 14th January 2008 fairly rapidly but if you zoom in you can see that they have levelled out over the past few days.


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## i_in

Can anyone to post new graphics
I know kitco another one
thanks


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## quinn123

You can try mineweb as well as kitco for copper price charts.


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## joea

Hi.
The International Copper Council has revised its supply/demand forecast for copper to be 400,000 tonnes in deficit next year compared to a forecast of a 500,000 tonne surplus estimated a few months away.
For those who were not on the gold train, then perhaps a copper train would
show some good profits. If my wave counts are correct, there will be an opportunity to buy in on the current pullback.


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## GumbyLearner

It's been quiet on this thread for a while.

Apparently btw 50 to 80% of the copper at the LME has been cornered.

*JP Morgan revealed as mystery trader that bought £1bn-worth of copper on LME
*
The American investment bank JP Morgan is the mystery trader that grabbed more than half the copper on the London Metal Exchange, *The Daily Telegraph has learned.*

http://www.telegraph.co.uk/finance/...r-that-bought-1bn-worth-of-copper-on-LME.html


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## Trembling Hand

GumbyLearner said:


> Apparently btw 50 to 80% of the copper at the LME has been cornered.
> 
> *JP Morgan revealed as mystery trader that bought £1bn-worth of copper on LME
> *




Good one. More evidence that the boom and next bubble is well speculation via ETFs. First Gold, then Silver now Copper. Wait for the regulations once ETFs hit foods. 



> Traders said JP Morgan's name had been circulating the market all day as the most likely buyer, especially since it is about to launch a physically-backed "exchange-traded fund" (ETF) in copper imminently.
> One metals broker dealing on the LME said: "The story is that they're positioning themselves in front of the ETF. There's been a lot of speculation it's them."
> Traders noted that there was no physical shortage of copper in the markets but that fears of a squeeze have persisted ever since a raft of investment banks announced their intention to launch ETFs this autumn.
> Last month metal traders wrote to the Financial Services Authority (FSA) claiming that licensing the funds, which are also likely to be launched by BlackRock, Goldman Sachs and Deutsche Bank, may amount to "approving the next financial bubble".


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## alphaman

Until now all plans to launch a copper ETF have aborted due to high storage cost. I wonder how JPM managed to pull it off.


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## It's Snake Pliskin

Worth buying copper rounds then for some physical holdings?

Probably worth the effort for some barter commodity?


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## GumbyLearner

One Company Holds *at Least 90%* of LME Copper Stocks

http://www.bloomberg.com/news/2010-...-london-metal-exchange-copper-stockpiles.html

One unidentified company holds 90 percent or more of copper stockpiles in warehouses monitored by the London Metal Exchange, the latest bourse data shows.

The so-called dominant position indicated in the Warrant Cash Banding Report was previously 50 percent to 79 percent and moved to the higher band on Dec. 10, according to data from the bourse. The figure includes stockpile holdings and open positions for the next three trading days. Each warrant represents one lot of metal, equal to 25 metric tons.

The fee to borrow copper for next-day delivery, also known as the tom-next spread, jumped to a premium of as much as $13 today, the most since July 2009. It was last at a discount of 50 cents. LME rules oblige holders of dominant positions to lend metal at fixed rates.

“The dominant long is even longer than they were previously, and it’s having an impact,” Robin Bhar, an analyst at Credit Agricole SA’s investment-banking unit in London, said by phone today. “It’s forcing short-term rates to borrow metal to go higher.”


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## iced earth

_*Copper - 08.03.11*_

copper has fallen these two recent trading days. now copper has two resistance line in front of it.




if those mentioned resistance lines cant hold copper and the neck line of this possible head and shoulder pass down we might see copper fall around 3.8 USd/lb.




in longer point of view we have a bullish head and shoulder with the incredible target around 6.1 USd/lb.


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## iced earth

_*Copper - 11.03.11*_

copper has broken the neck line of the bearish Head and Shoulders. target is around 3.8 us$/lb 




in this picture we see two resistance lines couldn't hold copper cant hold copper 





in longer point of view we have a bullish head and shoulder with the incredible target around 6.1 USd/lb. ( around 3.8 it might touch the resistance line and start a new bullish wave .


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## iced earth

Copper - 30.03.11

copper has formed left and right shoulders , if the neck line passed down , the target is around 4.130 us$/lb


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## iced earth

copper is forming pullback to the neck line , the target might be around 4.130


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## tinhat

With the Bernanke and the QE III, is copper about to break out of a pennant formation?


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## tinhat

Copper has broken out of a wedge to the downside on the monthly chart.


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## tinhat

Tentative signs that copper may have bottomed for the time being.

http://www.kitcometals.com/charts/copper_historical_large.html

Note LME stocks have come back from their peak just recently.


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## Ann

Just took a look at the copper chart and saw a potential outcome for copper of 5370. However the price on my chart bears no resemblance to other prices I see on other copper charts and I know nothing about copper, so please forgive. 

May get there may not...just a bit of fun with charts.


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## MARKETWINNER

_Supply in the global copper market is widely expected to exceed demand in 2013.
However these projections can change at any time due to new development.
Sooner than later we should see end of downtrend pressure for copper.
Copper prices would likely rebound in the next three to six months.

http://www.reuters.com/article/2013/05/31/markets-metals-idUSL3N0EC0GD20130531
METALS-Copper heads for gains in May after 3-month drop

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions. Please note that I do not endorse or take responsibility for material in the above hyper-linked site._


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## Mutasim

Just wondering what happened here. I don't usually follow the copper prices so excuse me if I'm looking at this wrong.


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## Trembling Hand

Mutasim said:


> Just wondering what happened here. I don't usually follow the copper prices so excuse me if I'm looking at this wrong.
> 
> 
> View attachment 54259




Just a data error from Kitco I would say.

http://www.kitcometals.com/charts/copper_historical.html


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## tinhat

Is it time to think about copper miners?

I've got positions in TGS and CDU (yet to produce) and both have been challenging stocks to own for their own reasons. I also have a positions in RIO and CZI which are both partially copper plays.

What are people's preferred copper stocks? I'm looking to put together a watchlist of companies with decent medium term prospects and outlooks assuming the price of copper is at the bottom of the cycle.


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## burglar

tinhat said:


> ... I'm looking to put together a watch list  ...




Tiger Resources (ASX: TGS)
Azure Minerals (ASX: AZS) 
Oz Minerals (ASX: OZL)
Sandfire Resources (ASX: SFR) 
CuDECO (ASX: CDU)
Adelaide Resources (ASX: ADN)
Rex Minerals (ASX: RXM)
And Lincoln Minerals (ASX: LML) from here:
lincolnminerals Quarterly_Activities_Report_March_2014


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## Paavfc

SMD, ENR

Both have up and coming drill results due...


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## burglar

PeppinNini (ASX: PNN)


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## tinhat

Thank you for the replies. I will look into them over the coming weeks. I am impressed with what TGS have been able to achieve. They are very low cost too. Of course operating in the Democratic Republic of the Congo comes with some risk but the copper mining industry seems to be well established in that country. They have accelerated their capital expansion which has seen them skating on thin ice with regard to projected cash flow that required them to undertake a capital raising that knocked back the share price after having had a nice run up. Also, a share issue as payment in kind for their trucking contractor raised eyebrows at the time, but might have also come about because the cash flow was getting tight during the construction and commissioning of the plant. They are low cost and looking to replicate their cathode production plant only just commissioned to double copper cathode production over the next eighteen months with a promise that shareholders should start to see dividends in 2016.


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## burglar

Hannans Reward (ASX: HNR)

HNR Copper/ Gold Deposit Re-release of Maiden JORC Resource at Pahtohavare 03/02/2014


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## tinhat

Giddy-up! It will be a long recovery, but this may be confirmation that the bottom has passed? It will be interesting to see where the next bottom comes in (>$2.10 per lb?)


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## notting

tinhat said:


> Giddy-up! It will be a long recovery, but this may be confirmation that the bottom has passed? It will be interesting to see where the next bottom comes in (>$2.10 per lb?)
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 68752





And here I was thinking it was China stimulus coming online, however it seems maybe a bet on a Trillion dollar Trump US infrastructure spend!

A little terrifyingly however lets start with Trump Prisons -


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## Younga

Anyone here able to give a technical analysis view of copper?


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## frugal.rock

"Peru mining protests risk clogging $53 billion investment pipeline, industry warns"









						Peru mining protests risk clogging $53 billion investment pipeline, industry warns By Reuters
					

Peru mining protests risk clogging $53 billion investment pipeline, industry warns




					au.investing.com


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