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One Thing Missing From Copper Boom Is Buyers of Actual Metal

  • Premiums that suggest level of physical demand have stayed low
  • Optimists expect fundamentals to catch up with futures prices
An employee inspects coils of copper rod at the Luvata Malaysia Bhd. plant in Pasir Gudang, Johor, Malaysia, on Monday, May 13, 2013. At a time when copper stockpiles are rising to the highest in a decade, manufacturers are paying the biggest premiums for the metal in as much as seven years as financing deals lock up supply and extend lines at warehouses.
Photographer: Bloomberg/Bloomberg
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The world economy is taking off, factories are humming again and copper futures prices are jumping. The one thing that’s missing is buyers of the actual metal.

Evidence of the anomaly can be seen in the premiums that purchasers of physical copper pay over futures prices to cover shipping and other costs.