Copper

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Copper is a traded commodity that is a key industrial metal and has also been used in currencies such as the U.S. and British penny. Copper futures and spot contracts are traded over the counter and on exchanges such as the London Metal Exchange and the CME Group's Comex division.

The price of copper is often used as a proxy for the overall health of the global economy, since much of the world's infrastructure, such as transportation, telecommunications and construction, relies on copper.[1]

In February 2011, copper reached an all-time high of $4.63, during a period of surging demand from China for industrial and building materials such as copper.[2]

Available Products

CME Group's listed copper contracts include futures and options on its full-sized contract, which is 25,000 pounds,[3] as well E-mini copper futures, which are sized at 12,500 pounds.[4] Additionally, CME Group also offers off-exchange copper contracts on CME ClearPort. The LME offers futures and options as well as physical copper, with an underlying size of 25 tonnes, as well as a mini-copper cash-settled monthly futures contracts with an underlying of 5 tonnes.

In 2011, two firms, JP Morgan and BlackRock sought approval from the Securities and Exchange Commission to launch exchange traded funds focusing on physical copper. However, approval of the two funds, the JPM Morgan Physical Copper Trust and BlackRock's iShares Copper Trust was delayed two years due to protests and legal challenges by the copper industry, who said such funds would "will inflate prices for the metal and distort supplies."[5]

The JP Morgan ETF received approval for its fund on December 17, 2012; BlackRock's iShares Copper Trust gained approval on February 22, 2013[6] Both funds are traded on NYSE Arca.

ETF Securities Ltd. also has said its plans to start physically backed ETFs for industrial metals in the U.S.

References

  1. Investing in the Copper Market. InvestmentU.
  2. Copper at record high on China trade data. MarketWatch.
  3. Copper Futures. CME Group.
  4. E-mini Copper Futures. CME Group.
  5. SEC faces legal challenge on approval for JPMorgan's copper ETF. ThomsonReuters.
  6. BlackRock Gains SEC Approval for Copper-Backed Fund. Bloomberg.