Copper market rollercoaster: Is the ride over?

Where is the copper market now?

The copper market has been experiencing significant volatility, especially in June and July, raising concerns among traders and industry analysts. The Comex market, believed to still be under investigation (I’ll get back to you on that one), has seen copper prices rallying over 2000 points, marking a substantial shift in the market landscape.

Yesterday, the nearby prices on Comex showed some signs of easing. Notably, JP Morgan made a significant move by issuing 299 lots of Comex, influencing the lending dynamics for May and July. This action drove the price up by 10c-12c, signaling a notable impact on the market.

The July/September Comex close was around 950 points in a backwardation (back); that’s $22 per Comex 100 points. This situation reflects the market’s response to the ongoing volatility and the anticipation of future price movements.

Adding to the complexity, the copper arbitrage (arb), was out to 462 today, indicating another layer of strategic considerations for market participants. This dynamic situation underscores the need for traders and firms to stay agile and well-informed as the market continues to evolve.

Amidst the rubble

Market is still left short material over the coming months and hedge books have just been caught in a storm of price movements and tight spreads. So, the recycled metals market must take note and keep a close eye on this, not just for the obvious reasons of copper scrap being priced off of Comex copper, but also because annual contracts are around the corner and this type of situation could have a strong impact on your pricing and forecast for 2025.

Heavy losses have been reported since Tuesday, with some firms potentially facing closure due to the market turmoil. However, amid the chaos and volatility, there have also been significant winners. The market’s unpredictable nature this week has led to substantial shifts in fortunes for many traders.

Back to the investigation

The investigation into the Comex copper market where there were two very questionable trades right at the market close is still ongoing, or so the market believes. Is there truly an investigation happening, or will the exchange allow those end-of-day trades to slide right through?

One thing is for sure, this copper rollercoaster ride is not over yet!