2 May 2006

'Feeding frenzy' alarms copper users

Telegraph | Money | 'Feeding frenzy' alarms copper users: "In letter to the LME and the Financial Services Authority, the International Wrought Copper Council said that its members faced severe difficulties financing deliveries. 'This market, where speculators can buy what does not exist, is doing serious damage to our industry and will bring into question whether the LME copper price should continue to be the recognised reference price,' it said.
Copper has surged by 60pc this year, and has touched $7,385 a tonne. It was just $1,400 four years ago. Now, it's $7220. 'We've never had a spike of such magnitude before,' said Simon Payton, the IWCC's chairman. 'This is a feeding frenzy driven by hedge fund speculation. This would not be happening if the price was left purely to industrial supply and demand. The market may be tight, but it is well-balanced.'
'You have to take it with a pinch of salt when the LME claims it managing this market on the basis of industrial demand. I'm not sure their methods can detect whether wolf pack speculators are manipulating the futures markets three months out,' he said."

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