The price of copper in New York reached a record high after shorting the market prompted traders to scramble to ship copper from other regions to the US.
After a sudden surge of more than 7% this week, the premium for copper futures contracts that were delivered later on the New York Mercantile Exchange (Comex) in July reached a record high, and the price level was at an all-time high compared to other commodity exchanges around the world.
Michael Cuoco, head of sales for metals and commodities hedge funds at StoneX Group, said that short spreads and futures contract holders are being forced to take positions.
The surge was almost entirely concentrated on Comex's most active July contracts.
Comex's July delivery copper rose 4.2% to $5.0855 per pound on Wednesday, surpassing the previous high of the most active contracts in March 2022. Comex copper's new high is equivalent to $11,212 per ton, which is more than $1,000 higher than the latest benchmark price on the London Metal Exchange (LME) (which also hit a two-year high).
Dongwu Jiuying's Jia said that part of the reason for the sharp rise in contracts in July was that traders engaged in so-called reverse arbitrage transactions were forced into positions.