LME WEEK
China’s Billion-Dollar Cash-for-Copper Trade Grinds to a Halt
China’s bonded warehouses are all but empty and the implications are being felt across the copper market.
Copper tubing is for sale at a store in Shanghai.
Photographer: Kevin Lee/Bloombeg
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For the past 15 years, the center of gravity of the global copper market has been a row of warehouses in Shanghai’s free-trade zone where the Yangtze River meets the Pacific.
Traders from London to Lima would obsess over the flows in and out of Shanghai’s huge bonded copper stockpile. It was the focal point for a multi-billion-dollar cash-for-copper trade, whereby Chinese companies would use metal as collateral for cheap financing. A cottage industry of analysts sprang up to estimate the size of what became the world’s largest cache of copper metal.