One Company Holds at Least 90% of London Metal Exchange-Monitored Stocks

Dec. 15 (Bloomberg) --At least 90 percent of the copper in warehouses monitored by the London Metal Exchange is being held by one unidentified company, bourse data show. The metal traded about 1 percent below its record today.

The so-called dominant position indicated in the Warrant Cash Banding Report moved to the higher segment on Dec. 10 from 50 percent to 79 percent, the data show. The figure includes stockpile holdings and open positions for the next three trading days. LME inventories totaled 350,900 metric tons as of Dec. 14.

"I highly doubt it’s one player trying to squeeze the market,” said Ji Xianglong, an analyst at Xinhua Futures Co. "It could tighten short-term supply but the outlook for the longer term is for a shortage anyway and that’s what’s driving prices to record levels.”

Copper for three-month delivery surged 24 percent in London this year on expectations usage will outstrip supply, draining stockpiles, and on speculation the planned introduction of exchange-traded products backed by the metal will boost demand.

Inventories monitored by the LME fell 30 percent this year and are set for their first annual drop since 2004.

The premium to borrow copper for next-day delivery, also known as the tom-next spread, jumped to as high as $13 a ton yesterday, the most since July 2009, and was last at a discount of 50 cents. LME rules oblige holders of dominant positions to lend metal at fixed rates.

Not Unusual

The current situation in the copper market is "not unusual and the exchange is exercising its well-established procedures for maintaining an orderly market,” Diarmuid O’Hegarty, deputy chief executive officer of the LME, said in a comment e-mailed by the exchange.

The three-month copper contract climbed to a record $9,267.50 a ton yesterday, and traded at $9,173.25 a ton at 1:52 p.m. Singapore time today.

One unidentified firm held 50 percent to 79 percent of the copper stockpiles from Nov. 22 through Dec. 9, exchange data showed.

JPMorgan Chase & Co. was holding the dominant position, the Daily Telegraph reported on Dec. 3, citing unidentified people.

Jennifer Zuccarelli, a spokeswoman for the bank in New York, said JPMorgan doesn’t hold 90 percent or more of the copper stock warrants. She declined to comment if the bank holds a dominant position of less than that amount.

Dominant positions exist in other LME metals, bourse data show. One unidentified company holds 50 percent to 79 percent of the aluminum alloy stockpiles and one party controls 50 percent to 79 percent of the nickel inventory. In zinc, one company has 50 percent to 79 percent of the metal.