Freight bottleneck squeezing US copper traders

Despite the US copper cathode premium hovering at its highest level since October 2016, the trading community has endured shrinking margins due to soaring freight rates, increased financing costs and a lack of consumer interest.

Even after London Metal Exchange copper prices fell off starting in mid-2015 - with the three-month contract bottoming at $4,320.50 per tonne in mid-January 2016 - US copper premiums never slipped below the 5-cent-per-lb threshold. Market participants noted that premiums below that level would make it unreasonable to move material across the country, citing freight costs, insurance and other expenses.
But now prices have recovered - the LME three-month copper contract closed at $6,989 per tonne on February 28 - and still those gains haven't translated to increased profits for copper traders.

"Traders have approached the market...

Published

Dalton Barker

March 01, 2018

03:08 GMT

Chicago