High Grade Copper Sep '21 (HGU21)
|Contract||High Grade Copper|
|Tick Size||$0.0005 per pound ($12.50 per contract)|
|Daily Limit||10% above or below previous settlement|
|Contract Size||25,000 pounds|
|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 the 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 that had copper tubing 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) pushed higher in Q1-2019 and posted the high for the year in April at $2.9955 per pound. Strength in the U.S. economy and record highs in the stock market bolstered the outlook for strong copper demand in 2019. Also, strong copper demand from China, the world's biggest copper consumer, gave prices a lift after China's imports of copper concentrate in Q1-2019 rose to a record high of 5.6 million metric tons. Copper prices than ratcheted lower into September 2019 when they posted a 3-year low of $2.4675 per pound. A rally in the dollar index to a 2-1/2 year high in September 2019 weighed on copper prices, as did the ongoing trade war between the U.S. and China. The trade war helped push China's Q2-2019 real GDP growth down to +6.2% yr/yr, the slowest pace in almost 30 years. However, copper prices rallied into year-end after the U.S. and China agreed to a phase-one trade deal in December 2019. Copper prices finished 2019 up +6.3% yr/yr at $2.7940 per pound.
Supply - World production of copper in 2019 fell -2.0% yr/yr to 20.000 million metric tons, down from the previous year's record high. The largest producer of copper was Chile with 28.0% of the world's production, followed by Peru with 12.0%, China with 8.0%, the U.S. with 6.5%, and Australia with 4.8%. U.S. production of refined copper in 2019 fell -6.5% yr/yr to 1.000 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 refined copper in 2019 rose +1.6% yr/yr to 1.850 million metric tons. The primary users of copper in the U.S. are wire rod mills, followed by brass mills.
Trade - U.S. exports of refined copper in 2019 (annualized through July) fell -24.1% yr/yr to 144,034 metric tons, down from the previous year's record high of 189,820. U.S. imports of copper in 2019 (annualized through July) fell -16.9% yr/yr to 645,943 metric tons, below the record high of 1.070 million metric tons in 2006.
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