A Study of Copper Contract Specification in International Market Submitted by:

Sandip Pastagiya 128050592073 Sunil Patil 128050592081

Mukesh Singh

128050592106

Introduction
Copper is a metal that has been known all around the world since ancient times. From West Africa to China to Europe to Central and South America, copper has been mined and worked continuously from as far back as 8,700 BC. As one of the few independently occurring metals, copper has been used in a multitude of forms, from prehistoric pendants to modern-day piping and more.

 Copper (chemical symbol - Cu) is a malleable and ductile metallic element that is an excellent conductor of heat and electricity. It is also corrosion resistant and antimicrobial. It stands at the third place after steel and aluminium, in the context of consumption. Copper is an important contributor to the national economies of mature, newly developed and developing countries. Copper is one of the most recycled of all metals. It is our ability to recycle metals over and over again that makes them a material of choice.

 Copper Exchanges

The futures contract for copper is traded at the New York Mercantile Exchange (NYMEX) through its Commodity Exchange (COMEX) division and London Metal Exchange (LME)

 Demand and Supply

In 2011, worlds copper mine production continued to underperform with respect to capacity, and remained at the 2010 level of 16.005 million metric tonnes (MMT). In 2011, the global refined copper production was 19.630 MMT, up from 18.998 MMT in 2010. The global refined copper consumption was 19.988 MMT, compared with 19.375 MMT in the previous year. On a regional basis, refined copper production increased in Africa (11%), Asia (6%), Europe (4.5%) and Oceania (12.5) but decreased in the Americas (-3.5%).

Global Scenario Growth in refined copper usage has been especially strong in Asia, where demand has expanded more than five-fold in less than 30 years. Major refined copper exporting countries are Chile, Zambia, Japan, Russia and Peru, while major refined copper importing countries are China, USA, Germany, Italy and Taiwan. Indian Scenario

In 2012, India's production of refined copper is 689,312 MT, which is around 4% of the total world production. Sterlite Industries, Hindalco, and Hindustan Copper are three major producers of copper in India. From the status of a net importer, India is emerging as a net exporter of copper on account of a rise in the production of copper. Electric and electronic products industry has become India's largest copper consuming sector, accounting for 36% of the total Indian copper consumption. Telecom is still India's second largest copper consuming sector, accounting for 20% of the total Indian copper consumption.

Exchange
LME

Product
Grade A Cathodes 25 MT

Lot Size

IST
6:30 to 00:30* 17:10 to 22:40**

Shanghai

Futures Standard Copper

5 MT

6:30 to 9:00 11:30 to 13:30

Exchange (SHFE) COMEX Grade 1 Electrolytic Copper MCX Grade 1 Electrolytic Copper 1 MT 25,000 pound

18:00 to 17.15***

10:00 to 23:30 (MondayFriday)

10:00 to 14:00
(Saturday)

 Factors Influencing the Market Copper prices in India are fixed on the basis of the rates that rule in the international spot market, and Indian Rupee and US Dollar exchange rates. Economic events such as the national industrial growth, global financial crisis, recession and inflation affect metal prices. Geopolitical events involving governments or economic paradigms and armed conflict can cause major changes. As societies develop, their demand for metal increases based on their current economic position, which could also be referred as National Economic Growth Factor.

Symbol
Description Trading period Trading session

COPPER
COPPERMMMYY Monday through Saturday Monday to Friday: 10:00 am to 23:30 Saturday:10:00 am to 14:00

Contract listing Expiry date Trading unit Quotation/base value Tick size Maximum size Daily price limit Initial margin

As per contract launch calendar Last day of the contract month 1 MT =250 Kg 1kg

5 paise per kg order 70 MT

4% Minimum 5% or based on SPAN, whichever is higher

Additional Margin In case of additional volatility, an additional margin (on both buy side and side) and/or special margin (on either buy side or sell side) at such percentage, as deemed fit, will be imposed in respect of all outstanding positions.

Copper Contract Specifications at NYMEX : Copper Contract Specifications TickerSymbol Open Outcry: HG (NYMEX)

Electronic: EHG Contract Size Deliverable Grades 25,000 pounds Grade 1 electrolytic copper conforming to the specification B115 as to chemical and physical requirements, as adopted by the American Society for Testing and Materials, and of a brand approved and listed by the Exchange. Contract Months All months

Trading Hours

NYMEX Open Outcry: Monday-Friday 8:10am1pm EST CME Globex Electronic: Sunday-Friday 6pm5:15pm EST

Last Trading Day

Trading terminates at the close of business on the third to last business day of the maturing delivery month.

Last Delivery Day

Price Quote

Last business day of the delivery month.

U.S. cents per pound.

Tick Size

0.0005 per pound = $12.50/contract, 1 cent =$250/ contract 1. Initial price limit, based upon the preceding day\'s

Daily Price Limit (Not applicable in electronic markets)

settlement price, is 20 cents per pound. 2. Two minutes after the two most active month\'s

trade at the limit, trading in all months of futures

and option will cease for a 15-minute period. 3. Trading will also cease if either of the two active months is bid at the upper limit or offered at the lower limit of two minutes without trading. Trading will not cease if the limit is reached during the final 20 minutes of a day\'s trading. 4. If the limit is reached during the final half hour of trading, trading will resume no later than 10

minutes before the normal closing time.

5. When trading resumes after a cessation of trading, the price limits will be expanded by increments of 100%.