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Big trader is trying to corner the copper market- 2016 China(Guangzhou)Non-Ferrous Metals Exhibition
1/26/2016 non-ferrous metals expo |
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Mr Tyler Durden wrote in Zero Hedge that it may not be as sexy as gold and silver, but sometimes even doctor copper needs a little squeeze and corner love as well, and according to Bloomberg, that is precisely what someone is trying to do. One company whose identity is unknown, is hoarding as much as half the copper available in warehouses tracked by the London Metal Exchange.
However, unlike the famous cornering of silver by the Hunts in 1980 which sent the price soaring if only briefly, in this case the unknown manipulator is trying to push the price of the physical lower. By taking control of half the available copper, the trader can help drive up the fees associated with rolling forward a short position, making it tougher for speculators to keep their bearish, explains Bloomberg.
In its disclaimer warning, Bloomberg writes that the episode, which caught traders by surprise "is one example of the perils of trading on the London Metal Exchange, where contracts are physically settled and speculators can end up paying dearly if they leave their bets without an offsetting position. Money managers are holding a net-short position on the LME, with prices down 23 percent in the past year and no sign of a recovery in Chinese demand."
So who is trying to corner the plunging in price metal? According to Bloomberg, the suspect who controls a large portion of the copper is an unidentified company. "Two firms held 40 to 49 percent of copper inventories and short-dated positions, according to Jan. 19 exchange data that shows holdings as a proportion of available stockpiles. While the LME provides data on the approximate size of large positions, it doesn¡¯t disclose who is behind them."
One wonders if perhaps the question is not which company is behind the cornering, but rather which country.
- 2016 China(Guangzhou)Non-Ferrous Metals Exhibition
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