Monday , March 1 2021

The Chinese brokerage makes a $ 1 billion copper bet in four days


Tom Daly

My nujen

Min Shang

February 23 (Reuters) – Shanghai Leaf Futures, a brokerage firm on the Shanghai Futures Exchange, has secured a $ 1 billion lease on copper contracts in as little as four days, according to Bors data.

Copper prices have almost doubled in less than a year, thanks to a number of stimulus measures aimed at reviving global industrial activity and boosting consumption.

In the four trading days following the lunar New Year holidays, the lesser-known brokerage firm became the top holder of Shfe copper contracts in May, June and July, increasing its copper leverage by more than 800%. .

In doing so, it added 19,774 pieces of copper to its copper position in the April-July contracts, equivalent to 6.7 billion yuan ($ 1.04 billion) based on the closing price of ShFE’s most active April contract on Tuesday.

The brokerage firm provides investment advice and a channel for customers to trade on futures exchanges.

Prior to the start of the holiday on February 10, Leaf Futures held only 2,503 plots of land in the May contract, compared to 8,503 plots on February 23rd.

The Department of Public Relations at Leaf Futures said they were unaware of the situation.

“Copper prices have risen recently and Dalu Futures has raised its long-term position,” broker-analyst Lee Shun told Reuters. Low inventory, interest from large institutional investors and cyclical industrial growth are the three main factors for its purchases.

Dalu Futures’ customers are balanced into three main categories: industrial clients, lower processors and customers, including corporate investors and speculators.

The brokerage firm’s four-day buying on Tuesday saw ShFE April copper futures rise 14% to 68,790 yuan per 9-1 / 2 high.

The brokerage firm said in a note released on Sunday that the price of Shanghai copper this week could be between 60,000-70,000 tons.

Parallel to the copper play, the blades also took the second longest spot on the ShFE May Aluminum contract – at the same time.

The controlling shareholder of the brokerage firm is Shongshan Securities, a unit of Shenzhen-listed Guangdong Golden Dragon Development.

Dalu’s aggressive accumulation has caught the attention of other market participants.

“The total volume is not small. If they leave (the market) suddenly, it will affect the price. ”Said a metal dealer in Shanghai, referring to the placement of leaf futures.

According to the latest data, Leaf Futures has accumulated 98,870 tons of copper long stretches since February 18, reaching a total ShFE inventory of 112,788 tons by February 19.

There is a risk of prices falling if the Leaf Futures PA course series is reversed and many other brokerage firms share their enthusiastic vision.

“We expect copper prices to remain strong. We will increase the price of high quality LME copper from $ 9,000 to $ 10,000 per tonne. Shanghai will raise copper to 71,000 yuan per tonne, ”said Gong Ming, an analyst at Jinrui Futures. ShFE No. 3 long spot holder in copper.

She said price volatility could rise due to the influx of speculative funds.

LME traded GMT 1028 for three months at $ 9,064 a tonne.

“Whether it’s inflation or carbon neutral emissions or electric vehicles, there is a fast building from different angles. So this is becoming a hot topic and a good story for Copper, ”said Tiger Shee, Brokerage Managing Director of Bands Financial.

($ 1 = 6.4603 Chinese Yuan)

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