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As copper price rises, rumours abound of market manipulators
Jul 27, 2009 11:47AM
has mister copper returned? it is odd that when the price of silver is held down, they deny any talk of manipulation, but when copper goes up, that's the first thought on their minds:
While the global recession has hit most commodities hard, the red metal has defied gravity and last week hit highs for 2009. Copper contracts for delivery in three months' time closed at $5,522 on Friday, 76pc ahead of the low on Christmas Eve last year.
One trader said: "It looks funny. There are vast volumes being bought in the markets, it's got all the hallmarks of someone trying to corner the market."
Ever since 1996, when Yasuo "Mr Copper" Hamanaka of Sumitomo Bank managed to buy 5pc of the copper market in what was then the world's biggest fraud, the non-ferrous metals market is periodically swept up in conspiracy theories of foul play and manipulation.
Subsequent "Mr Copper" scares have ranged from the spurious to politically controversial. The sharp rise in copper futures this year is good enough reason for the latest bout of rumours. Once again China is a prime suspect where there has been strong buying interest. But there are other theories too.
Some traders argue that some of the biggest firms could be trying to corner the market to keep their share prices high in what has been a torrid time for commodities firms.
All the big firms deny this as nonsense while the LME itself has told several individuals who have complained that it can see no irregularities.
Right or wrong, the conspiracy theories can abound because copper is both illiquid and cannot easily be transferred around the world to meet shortages. Capturing a small percentage of the market can allow a stockpiler to control the price of the metal.