High Grade Copper Dec '17 (HGZ17)
|Contract||High Grade Copper|
|Tick Size||$0.0005 per pound ($12.50 per contract)|
|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 in Q1 of 2017 on strength in the U.S. economy after the Fed ISM manufacturing index rose to 57.7, the fastest pace of expansion in 2-1/2 years. Copper prices fell back in Q2 and posted the low for 2017 in May at $2.4700 per pound. Weak Chinese demand undercut copper prices as China Jan-May unwrought copper imports fell -20% yr/yr to 1.84 MMT and hopes faded that the Trump administration would be able to pass its infrastructure spending plans. Copper prices trended higher the remainder of the year and posted a 4-year high in December at $3.2955 per pound. A slump in the dollar index to a 3-year low in September boosted copper, as did the surging U.S. housing market after November new home sales jumped to a 10-1/2 year high. Copper prices finished 2017 up +31% at $3.2795 per pound.
Supply - World production of copper in 2017 fell -2.0% yr/yr to 19.700 million metric tons, down from the 2016 record high of 20.100 million metric tons. The largest producer of copper was Chile with 27.1% of the world's production, followed by Peru with 12.1%, China with 9.4%, the U.S. with 6.4%, and Australia with 4.7%. U.S. production of refined copper in 2017 fell -7.6% yr/yr to 1.090 million short tons, which was far below the record U.S. production level of 2.490 million short tons seen in 1998.
Demand - U.S. consumption of copper in 2015 rose +2.8% to 1.810 million metric tons. The primary users of copper in the U.S. 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 2017 fell -27.1% to 97,473 metric tons, below the 2-decade high of 159,950 metric tons seen in 2012. U.S. imports of copper in 2017 rose +16.3% yr/yr to 823,309 metric tons, below the record high of 1.1 million metric tons in 2006.
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