High Grade Copper Sep '15 (HGU15)
|Contract||High Grade Copper|
|Tick Size||$0.0005 per pound ($12.50 per contract)|
|Daily Limit||5% above or below previous settlement|
|Contract Size||25,000 pounds|
|Trading Months||Mar, May, Jul, Sep, Dec (H, K, N, U, Z)|
|Trading Hours||5:00p.m. - 4:00p.m. (Sun-Fri) (RTH 7:10a.m. - 12:00p.m.) (Settles 12:00p.m.) CST|
|Value of One Futures Unit||$25,000|
|Value of One Options Unit||$25,000|
|Last Trading Day||Third last business day of the maturing delivery month|
The word copper comes from name of the Mediterranean island Cyprus that was a primary source of the metal. Dating back more than 10,000 years, copper is the oldest metal used by humans. From the Pyramid of Cheops in Egypt, archeologists recovered a portion of a water plumbing system whose copper tubing was found in serviceable condition after more than 5,000 years.
Copper is one of the most widely used industrial metals because it is an excellent conductor of electricity, has strong corrosion-resistance properties, and is very ductile. It is also used to produce the alloys of brass (a copper-zinc alloy) and bronze (a copper-tin alloy), both of which are far harder and stronger than pure copper. Electrical uses of copper account for about 75% of total copper usage, and building construction is the single largest market (the average U.S. home contains 400 pounds of copper). Copper is biostatic, meaning that bacteria will not grow on its surface, and it is therefore used in air-conditioning systems, food processing surfaces, and doorknobs to prevent the spread of disease.
Copper futures and options are traded on the London Metal Exchange (LME) and the CME Group. Copper futures are traded on the Shanghai Futures Exchange. The CME copper futures contract calls for the delivery of 25,000 pounds of Grade 1 electrolyte copper and is priced in terms of cents per pound.
Prices - CME copper futures prices (Barchart.com symbol HG) moved sideways to higher the first half of 2018 and posted a 5-year high of $3.3155 per pound in June. Strength in the U.S. economy and record highs in the stock market bolstered the outlook for strong copper demand in 2018. Also, copper prices soared on concern that workers at Chile's Escondida mine, the world's largest, would strike over wage demands. However, copper prices retreated into August to a 1-1/2 year low of $2.5520 per pound as concerns emerged that trade tensions between the U.S. and China would hurt Chinese copper demand. Copper prices then moved sideways in the bottom half of the year's range as a slump in global equity markets and a slowdown in China's economy limited the upside in copper. The S&P 500 fell to a 1-1/2 year low in December and China's Q4 GDP slid to 6.4% yr/yr, the weakest pace since 2009. Copper prices finished 2018 down -20% yr/yr at $2.6280 per pound.
Supply - World production of copper in 2018 rose +5.0% yr/yr to 21.000 million metric tons, a new record high. The largest producer of copper was Chile with 27.6% of the world's production, followed by Peru with 11.4%, China with 7.6%, the U.S. with 5.7%, and Australia with 4.5%. U.S. production of refined copper in 2018 rose +5.8% yr/yr to 1.100 million short tons, far below the record U.S. production level of 2.140 million short tons seen in 1998.
Demand - U.S. consumption of copper in 2015 rose +2.8% yr/yr to 1.810 million metric tons. The primary users of copper in the U.S. in 2015 by class of consumer are wire rod mills with 72.9% of usage, brass mills with 23.3% of usage, and nominal use of 2% or less by each of foundries, ingot makers, and chemical plants.
Trade - U.S. exports of refined copper in 2018 rose +80.0% yr/yr to 169,464 metric tons, a new record high. U.S. imports of copper in 2018 rose +0.7% yr/yr to 818,400 metric tons, below the record high of 1.070 million metric tons in 2006.
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