LME Copper

SETTING THE GLOBAL STANDARD

Copper was the first metal traded on the London Metal Exchange (LME) when
it was founded in 1877. Due to its widespread use in industry, copper is viewed as
being closely connected to macroeconomic events – so much so that some say
‘Dr Copper’ has a PhD in economics.

Copper is one of the oldest metals known to man, which was Copper mine production by country 2016
discovered and first used around 10,000 years ago for coins and (thousand metric tonnes)
ornaments. It was an essential element in transitioning from Chile
Peru
the Stone Age to the Bronze Age, as copper is mixed with tin China
Oceania
to create bronze. United States
Australia
Africa
5%
Congo 9%
The Egyptians used copper to sterilise water and treat infections. Zambia
Mexico
It is a good conductor of electricity as well as being ductile, so it Indonesia Europe
12%
was also extremely important in the industrial revolution. Canada
Russian Fed. Latin America 41% Copper production
Kazakhstan
by region 2016
Poland North
Mongolia 15% America

Copper’s main industry uses are: Brazil

Iran
Lao 18%
Spain
• Wiring Bulgaria Asia
• Piping Turkey

• Electric product manufacturing 0 1,000 2,000 3,000 4,000 5,000 6,000

Source: ICSG
• Building construction
• Infrastructure Industrial North America
Oceania

• Power generation 11% Latin America

0.04% Europe
10%
• Transportation Equipment
2%
18%

31% Transport Africa

13% 1%

Copper consumption Copper consumption

by industry 2016 by region 2016
Its use in construction is preferred in part because of its aesthetic
16%
appeal but also because it does not burn, melt or release toxic
Infrastructure
fumes in the event of a fire. It also protects water systems from Building
29% 69%
construction
dangerous bacteria. The metal is one of the few that does not lose Asia

its chemical or physical properties during the recycling process. Source: ICSG Source: ICSG

Copper production process

Electrolysis
Crushing Milling Flotation refinement

Ore mining Concentrates Anode Cathode Copper scrap

Copper bearing The ore is crushed Sometimes the concentrates The anodes are refined During the semi-fabricated
ores are and ground followed are roasted but all are predominantly by electrolysis to or finished product
extracted by a concentration transformed into a ‘matte’ during create copper cathodes. This is manufacturing stage,
by flotation the smelting process, before classed as ‘primary copper copper scrap is sometimes
being converted and refined to production’. The deliverable of generated and is regarded
produce copper anodes an LME Copper contract is by the industry as
Grade A copper cathode ‘secondary production’

LME Price
Trading copper on the LME
Adding copper to a portfolio can help to diversify the investment LME trading venues and prices
profile. All the LME’s base metals contracts have close ties with the Telephone – The Exchange supports an inter-office market
physical market. The prices discovered on our markets are used the between LME members, which operates 24 hours a day.
world over in physical contracts, and because they can be physically All telephone trades are matched and cleared through our
settled – using the LME warehouse network – LME prices converge matching platform, LMEsmart, and clearing house, LME Clear.
with the physical market.
Electronic – LMEselect is our electronic trading platform, which
The interaction on the LME between the physical and financial integrates with member trading platforms via a FIX API, either from
communities provides highly liquid and deep order books with member sites or via data centres to facilitate low latency trading
tight spreads. strategies. LMEselect is open for trading between 01:00 and 19:00
(London time). LMEselect is only available to LME members. Clients
The LME’s unique prompt date structure allows you to trade daily
of LME members can access LMEselect via member systems or
out to three months, weekly out to six months and monthly out to
member-sponsored Independent Software Vendor (ISV) platforms
ten years.
(see below for more details).
LME Copper facts The Ring – The Ring, our open-outcry trading floor, is central to the
• Lot size: 25 metric tonnes
process of price discovery. Each LME metal is traded in highly liquid
• Tick value: $12.50
five-minute Ring sessions, which are themselves representative of
• Cost to tick ratio: 0.216
global market supply and demand. Copper is traded on the Ring at
• Contract types: Futures, Options, TAPOs, Monthly Average
these times: 12:00-12:05, 12:30-12:35, 15:10-15:15, 15:50-15:55
Futures, LMEminis and HKEX London Minis traded on HKEX
and ceases trading at 16:35 (London time).
derivatives platform.
Prices – The LME Official Price for copper, discovered on the Ring
between 12:30 -12:35, is used as the global reference. Contracts
Useful reports and data for material in a pre-refined state will be priced at a ‘discount’ to the
LME Copper trading volumes, price and stocks data can be found
LME price and material further along the value chain, at a ‘premium’.
on our website: lme.com/reports.
The LME Copper Closing Price, discovered at 16:35, is used for
Get real-time and historical LME trading data from any of our margining and valuation purposes.
licensed distributors by visiting: lme.com/licenseddistributor
ISVs
For copper-specific data visit: lme.com/copper Members and their clients may choose to access LMEselect via
member-sponsored ISV platforms. Client traffic passes through
an ISV pre-trade risk engine endorsed and fully controlled by the
sponsoring member’s compliance team. The following ISVs have
passed LME conformance tests for order routing applications
connecting via the LMEselect API for LME Copper:
Cunningham Trading

Greeksoft Technologies
FlexTrade UK Limited
Trading Technologies

SharpPoint System

EPAM Systems, Inc

Trading Screen Inc

Software Technology
FFastFill Europe

Redline Trading
International Inc
Patsystems UK

ObjectTraining
Stellar Trading

Shanghai Feishu
FIS (SunGard)
RTS Realtime

Systems LLC
Technology
ATPlatform

Ion Trading

Fidessa plc

CQGT LLC
Solutions
OnixS.biz

Omnesys
Systems

Systems

E-Sunny

PVT. LTD
Limited

Limited

Ullink
Co. Ltd

KCG

Contracts

3M

3rd Weds

3rd Weds -
3rd Weds

LME
options
LME Copper trading data
Average daily volume 180,000 Futures Options TAPOs Options and TAPOs %ages (RHS) 10%
Daily volume for LME Copper averages over 160,000
9%
140,000 lots per day. LMEselect accounts 8%
140,000
for about 40% of all market traded volume. 7%
120,000
6%
100,000
ADV (Lots)
5%
80,000 4%
60,000 3%
40,000 2%
20,000 1%

0 0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Note: 2017 is H1 2017

Copper

3 Month price and intraday volatility 12,000 Copper 3M Price Volatility % (RHS) 140
The 3 Month (3M) price represents the
price agreed to settle or deliver material 120
three months from the time that the 10,000

price is agreed and concentrates liquidity

100
on one day.
8,000
Volatility is an important parameter

Volatility % (RHS)
80
US dollars ($)

for some participants as it can often

determine the level of involvement in 6,000

a financial instrument. 60

4,000
40

2,000
20

0 Futures Options TAPOs Options and TAPOs %ages (RHS) 0

120,000
7%
05

06

07

08

09

10

11

12

13

14

15

16

17

18

19
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

100,000 6%

80,000 5%
3rd Wednesday price
3rd Wednesday contracts are monthly LME Copper 3W price LME Copper 3W ADV (RHS)
ADV (Lots)

18,000 4%
60,000 8,000
futures that exist within the current 16,000
7,0003%
prompt date structure for all major LME 14,000
40,000 Copper
6,000
contracts expiring on the 3rd Wednesday 12,000 2%
US dollars ($)

of each month. 20,000

10,000 5,000
1%
Lots

8,000 4,000
0
6,000 3,0000%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
4,000 2,000
2,000 1,000
0 0
JAN Nickel
MAY SEP JAN MAY SEP JAN MAY SEP JAN MAY SEP
2015 2016 2017 2018

12,000 Nickel 3M price Volatility 10 Day % (RHS) 160

140
10,000
 3M to 3rd Wednesday spread 40
This is the spread between the 3M rolling
forward contract and a monthly futures 20

Month 2 – Month 3, US dollars ($)

contract or an adjustment of a position
0
from the daily expiry (three months
forward) into monthly expiry. -20

-40

-60

-80

-100
15

16

17

07

08

09

10

11

12

13

14

15

16

17
20

20

20

20

20

20

20

20

20

20

20

20

20

20
1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/
2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/
Calendar spread 60 Copper

3rd Wednesday to 3rd Wednesday

spreads are calendar spreads used 40
($)2 – Month 3, US dollars ($)

for rolling a position from one month

20
to another.
0

500
-20

-40
0
Month
Month 2 – Month 3, US dollars

-60
-500

-80
-1,000
07

7
00

00

01

01

01

01

01

01

01

01
20

/2

/2

/2

/2

/2

/2

/2

/2

/2

/2

-1,500
1/

1
2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

-2,000

-2,500

LME Copper arbitrages 8,000 LME 3M SHFE (EX VAT 17%) MCX CME
5

7
01

01

01

00

00

00

01

01

01

01

01

01

01

01

Copper
2

Regional prices for copper are impacted

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/
2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

7,000
by different factors including economic,
physical and logistical influences. Traders 6,000
can arbitrage the differences in copper price
5,000
on the Shanghai Futures Exchange (SHFE),
US dollars ($)

the Chicago Mercantile Exchange (CME) 4,000

and the Multi Commodity Exchange of
3,000
Nickel
India (MCX).
2,000

1,000
200
0
J J 0F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J
9 2016 2017 2018 2019
dollars ($)

-200
LME Copper contract specification
Contract specification LME Copper

Contract names and codes LME Copper (CA)

Contract type Futures

Delivery type Physically settled

Lot size 25 metric tonnes

Price quotation US dollars per metric tonne

Clearable currencies US dollars, Japanese yen, sterling, euro

Trading venues Ring, LMEselect and inter-office telephone

Ring: 11:40 - 17:00 London time

Trading hours LMEselect: 01:00 - 19:00 London time
Inter-office: 24 hours a day

Daily: out to 3 months

Contract period Weekly: 3 out to 6 months
Monthly: 7 out to 123 months

Venue Outright Carries

Minimum price fluctuation (tick size) per Ring $0.50 $0.01
metric tonne LMEselect $0.50 $0.01
Inter-office $0.01 $0.01

Termination of trading Up until the close of the first Ring the day before the prompt date

Margining Contingent Variation Margin applied

For more information about LME Copper please visit our website at lme.com/copper
or get in touch with the team: sales@lme.com
 © The London Metal Exchange (the “LME”), 2017. The London Metal Exchange logo is a registered trademark of The London Metal Exchange.
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of the Information, neither the LME, nor any of its affiliates makes any warranty or representation, express or implied, or accepts any responsibility or liability for, the accuracy, completeness, reliability or
suitability of the Information for any particular purpose. The LME accepts no liability whatsoever to any person for any loss or damage arising from any inaccuracy or omission in the Information or from any
consequence, decision, action or non-action based on or in reliance upon the Information. The Information does not, and is not intended to, constitute investment advice, commentary or a recommendation
to make any investment decision. The LME is not acting for any person to whom it has provided the Information. Persons receiving the Information are not clients of the LME and accordingly the LME is not
responsible for providing any such persons with regulatory or other protections. All persons in receipt of the Information should obtain independent investment, legal, tax and other relevant advice before
making any decisions based on the Information.
LME contracts may only be offered or sold to United States foreign futures and options customers by firms registered with the Commodity Futures Trading Commission (CFTC), or firms who are permitted to
solicit and accept money from US futures and options customers for trading on the LME pursuant to CFTC rule 30.10.
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