Q2 Industrial Metals Update

  • 16 Oct 2018
  • By CME Group
  • Topics: Metals

Copper Futures

  • Open interest in Copper futures surged by 87% YoY in 2017 to a record high of nearly 338k contracts on August 16, 2017 and has remained at elevated levels so far in 2018

    (Source: CME. Data as of 31 Aug 2018)

  • The marketplace for Copper futures is composed of a diverse group of participants

    Managed Money contribute to 34% of the overall Open Interest while Producers, Merchants and Consumers’ share is equal to 33%.

    (Source: CFTC. Data as of 31 Aug 2018)

  • According to the Commitment of Traders Report published by the CFTC, net position in COMEX Copper futures across Money Managers shifted into negative territory in July

  • From net long of 80,252 contracts on 12 June to net short of 30,836 on 7 August 2018, lowest since September 2016.

  • Long positions held by Money Managers at the end of Aug declined by 50% while short positions soared by 48% vs 12 June 2018

    (Source: CFTC. Data as of 28 Aug 2018)

  • Copper futures volume reached an all-time high in June with an average daily volume exceeding 172K contracts (~2 mil mt), up 65% YoY

  • YTD 140K contracts or approximately 1.6 mil mt of Copper futures traded every day so far this year

    (Source CME. Data as of 31 Aug 2018)

  • COMEX Copper inventory reached 252,986 short tons on 7 May 2018, the highest level in 14 years

    Warrant financing activity has increased, which has supported by the inventory growth in the last 4 years.

  • The spot month position limit currently stands at 1,500 contracts

  • Copper warehouses and physical delivery are available in 8 states in the U.S.

  • 13 warehouse companies are approved for COMEX Copper storage

    (Source CME. Data as of 31 Aug 2018)

Copper Options – Transparent and efficient way to trade

  • Average daily volume in Copper options has reached 1,400 contracts with open interest exceeding 25K and growing

  • Block trades and electronic volume have strengthened considerably as IDB’s have increased their activity in the market

    So far this year 30% of Copper options volume has been booked via CME Clearport block trades compared to a 6% share of volume in 2017. 

  • CME Direct Screen provides the most comprehensive trading access to CME Options markets

    Take advantage of narrow bid-ask spreads on CME Globex screen, instantly monitor option prices, implied volatility and Greek risk metrics in real-time.

    RFQ functionality will allow to electronically execute multi-leg and hedged options strategies while remaining completely anonymous.

    On CME Direct one can explore the world of advanced options analytics with value-added QuikStrike tools (open interest and volume heatmap, volatility smile, term structure).

Regional Risk Management tools

  • CME offers a suite of Futures products to manage regional Aluminum Premium risk

    These products cover U.S. Midwest premium (AUP), Japan premium (MJP), and European duty-paid (EDP) and duty- unpaid (AEP) premiums.

  • Average daily volume for the suite of Aluminum Premium futures so far this year was ~700 contracts (~18K mt), up by 25% YoY

    U.S. Midwest premium (AUP) futures is the most liquid contract which traded approximately 500 lots daily in the 1st half of this year, up by 40% YoY.

  • CME’s US Midwest Aluminum Premium futures contract is the ideal tool the hedge US import duties and aluminum premium price risk

    (Source CME. Data as of 31 Aug 2018)

  • U.S. Midwest Hot-Rolled Coil Steel Futures

    Average daily volume in HRC futures reached a record of ~750 contracts in August, up 136% YoY.

  • Along with US Busheling Scrap and Iron Ore contracts

    US Midwest Hot-Rolled Coil Steel futures is a perfect tool to manage regionally relevant steel, scrap, as well as global iron ore price risk.

    (Source CME. Data as of 31 Aug 2018)

Zinc Futures

  • Supported by professional Market Makers, CME Zinc futures markets show narrow bid / offer spreads during both Asian and London afternoon / US morning sessions

    Daily volume increased from zero in April-May to ~65-75 contracts in July-August while open interest reached 48 contracts by mid-August.

    (Source CME. Data as of 31 Aug 2018)

  • CME Zinc futures provide simplicity of monthly futures traded in the centralized electronic market

  • The settlement process is simple and transparent

    CME Zinc allows you to make significant capital savings due competitive margins, trading and clearing fees as well as significant margin offsets with other benchmark metals contracts like copper, gold and silver.

Benefit from Margin Offsets

For more up-to-date information, please check CME Group website

COMEX: cmegroup.com/clearing/margins/inters.html#exchange=CMX&sector=METALS
NYMEX: cmegroup.com/clearing/margins/inters.html#exchange=NYM&sector=METALS

* MJP vs AUP:
20% (MJP 08/2018 - 08/2018, AUP 09/2018-08/2023)
50% (MJP 09/2018 - 12/2020, AUP 09/2018-08/2023)

** ED vs GC:
25% (ED 08/2018 - 06/2023, GC 08/2018 - 06/2024)
35% (ED 09/2023 - 06/2028, GC 08/2018 - 06/2024)

Please find additional information on the calculation methods at https://www.cmegroup.com/about-margins.html

To learn more about Industrial Metal futures and options, please visit cmegroup.com or contact metals@cmegroup.com

About CME Group

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