Copper scrap contract deals slow as spot spreads widen

Dec 10, 2010 | 12:37 PM |

Copper scrap traders are eyeing wide discounts to the Comex with concern, with some even reporting delaying contracts in pursuit of narrower spreads.

Both buyers and sellers accept that discounts to Comex prices for copper scrap are inversely correlated to price moves in the market itself, and both parties wish to avoid being caught in sudden price movements.

Copper hit record highs this past week amid talk of a 2011 market deficit, further global demand growth, currency movements and filings for physically backed copper exchange-traded funds.

The most actively traded March Comex contract settled at $4.112 per pound Friday, up 0.6 percent from Thursday's close at $4.087.

"I have sold metal today for the first quarter. I locked in a spread because I thought it was a reasonable spread," one scrap trader said, noting that his deals are one to five months forward. "If the market drops a dollar I'm going to have a crappy spread."

Spreads for sales on bare bright have been reported in the 10- to 12-cent range, with transactions at spreads as wide as 14 cents below March Comex levels.....