High Grade Copper Sep '22 (HGU22)
|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) posted their low for 2021 in January at $3.4910 per pound. Copper then rallied sharply into Q2 and posted an all-time high of $4.8985 per pound in May. Optimism about a global economic rebound from the pandemic boosted copper prices as fiscal stimulus measures and vaccine rollouts fueled a resurgence in copper demand. Also, the trend of decarbonization worldwide, which includes switching to electric vehicles and expanding wind and solar power, was positive for copper demand. In addition, copper supplies were slow to be replenished as the pandemic led to the shutdown of mines in Chile, the world's biggest copper producer. Copper prices then fell back into Q3 on concern the Federal Reserve would soon begin tapering its stimulus measures. Also, turmoil in China, the world's biggest copper consumer, undercut copper prices on concern China Evergrande Group, the world's most indebted developer, would default. Copper prices then traded sideways to higher into year-end and finished 2021 up +26.7% yr/yr at $4.4550 per pound.
Supply - World production of copper in 2021 rose +1.9% yr/yr to a record 21.000 million metric tons. The largest producer of copper was Chile with 26.7% of the world's production, followed by Peru with 10.5%, China with 8.6%, the U.S. with 5.7%, and Australia with 4.3%. U.S. production of total new copper in 2020 fell -by 12.7% yr/yr to 860,000 metric tons, far below the record U.S. production level of 2.140 million metric tons seen in 1998.
Demand - U.S. consumption of refined copper in 2021 rose +8.7% yr/yr to 950,000 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 2020 (annualized through September) fell by -68.1% yr/yr to 39,900 metric tons, the smallest amount since 2008. U.S. imports of copper in 2020 (annualized through September) rose +1.9% yr/yr to 678,360 metric tons, well below the record high of 1.070 million metric tons in 2006.
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