On November 19, 2020, Shanghai International Energy Exchange will soon list international copper contracts. What changes will the international copper listing bring about? The author analyzes the current situation of international copper, international copper trading opportunities, and the future outlook of the international copper market.

Status of International Copper Listing

For a long time, due to the characteristics of copper standardization and easy for storage, copper spot trading is highly market-oriented and has extremely high liquidity. Therefore, copper import trade has become a good opportunity for financing-oriented trade under China’s unique financing environment, and the large amount of financing trade has made domestic copper prices lower than foreign copper prices for a long time. As imported concentrated copper and other raw materials need to be priced in LME dollars, while the products sold in China need to use the local copper price. The above-mentioned long-term inverted domestic and foreign prices are naturally a "losing-money business" for the domestic copper industry that relies heavily on the import of raw materials and the copper processing enterprises. However, due to the demand for profits, various domestic copper companies have to speculate prices in the futures market to make profits in the process of spot good pricing and hedging. Various cases of trading loss have been heard over the years.

Due to the huge demand for copper in China and the long-term inversion of internal and external price ratios, in order to avoid import losses, imported CIF copper has to be stored in warehouses in Shanghai Free Trade Zone. For a long time, the copper inventory in Shanghai Free Trade Zone has exceeded the sum of domestic duty-paid copper inventory and LME global warehouse inventory. Since Shanghai Futures Copper does not allow foreign companies to participate, the price of Shanghai Futures Copper cannot be used as a price for copper trade in the bonded zone outside the customs. The copper trade in the Shanghai Free Trade Zone has to use LME dollar price plus the CIF premium for the pricing.

The annual long-term supply of electrolytic copper between Chinese enterprises and foreign suppliers and the annual long-term negotiation of concentrated copper processing fees are the most difficult issues in the industry. This is why CSPT (China Copper Smelting Enterprise Purchasing Group) negotiated prices between major copper smelters in the United Nations and foreign copper ore suppliers.

International copper trading opportunities

As the most well-known domestic and internationally influential futures contract, there has been a very active arbitrage transaction between Shanghai Copper Futures and LME Copper Futures for many years. The cross-border arbitrage transaction of copper futures has existed for more than 30 years. However, due to the fragmentation of the domestic and foreign capital markets and the restriction of the inability of RMB to be freely convertible, cross-border copper arbitrage is more often due to the large fluctuations in the price for fund management and the pressure of risk control has increased the risk of arbitrage trading.

By using INE International Copper Contract, the original barrier between Shanghai Futures Copper and LME Copper will be narrowed, and foreign investors participation in China’s copper futures market will also be unimpeded. This means that there will be arbitrage transactions between Shanghai Futures Copper and International Copper without cross-border barriers and exchange rate risks. The author believes that with the full participation of market forces as well as the all parties involved in the market, the barrier-free arbitrage between Shanghai Futures Copper and INE International Copper will fully occurred, and the arbitrage and logistics between INE Copper and LME Copper around the CIF dollar premium implied by INE price will also fully occurred. In the future, the relative prices of Shanghai Futures Copper, INE International Copper and LME USD Copper will fluctuate in a very efficient and flat range. This will significantly improve the cost control and profit of domestic copper importing companies and copper smelting companies. However, when all parties in the market have not yet fully participated, for example, 6-12 months from the beginning of international copper listing, this will be the most ideal time for "smart capital" arbitrage.

Market Outlook of International Copper

The subject matter of Shanghai International Energy Exchange’s International Copper Contract is graded as Class A copper cathodes in the Shanghai Free Trade Zone. RMB net price transaction contract will realize RMB pricing for the trade of copper inventory in the existing bonded zone. At the same time, these copper spot traders have an additional counterparty which is Shanghai International Energy Exchange Center with national credit rating. This will greatly improve the liquidity of copper spot trade in the bonded area.

With the increase in liquidity of international copper contracts in the forward months, the formation of the forward curve, the contract pricing of maritime trade copper and even long-term trade copper will gradually be priced with reference to the international copper forward contract price. One or two years later, when Codelco (Chile National Copper Company) reported a premium of US$88 for the long-term order price of 2021 to Chinese customers today, Chinese customers will remind South American suppliers to refer to (corresponding to its implicit US dollar premium) and even use INE international copper in RMB price to price the trade contract between them.

At the same time, it is understood that large foreign mines and main traders are also paying close attention to the progress of the contract. In the future, due to the existence of the “pipeline” of international copper, the price inversion between the prices of Shanghai Futures Copper, INE International Copper and LME Copper will be greatly reduced. This will provide China’s copper smelting enterprises the incentive to negotiate with the raw material suppliers by using INE International Copper prices its raw material procurement contracts, it not only reduces the loss of buying the high price of raw materials and selling the low price of the products, but also avoids the risk of foreign exchange fluctuations and the frictional losses of foreign exchange hedging in RMB settlement.

2020年11月19日，上海国际能源交易中心即将上市国际铜合约。国际铜上市，将带来哪些变化呢，以下笔者将从国际铜上市的现状、国际铜的交易机会、国际铜市未来展望三方面来进行剖析。

国际铜上市现状

长期以来，由于铜标准化、易储存的特点，铜的现货贸易高度市场化且有着极高的流动性。也因此铜进口贸易成为我国特有融资环境下的以融资为目的贸易的良好载体，而融资贸易的大量存在也使得国内铜价长期低于国外铜价。因为进口铜精矿等原料需要用LME美元来计价，而产品在国内销售则要用上海期铜价格。上述长期倒挂的内外价格对于严重依赖原料进口的国内铜冶炼产业和部分原料依赖进口的铜加工企业，天然是个“亏本的买卖”。而由于需要扳回这“亏本的买卖”，国内各类铜企则不得不在点价和保值过程中，在期货市场搏价格以求谋取利润。其结果可想而知，多年来各类案例不绝于耳。

由于我国对铜需求巨大，加上内外比价长期倒挂，为避免进口亏损，进口到岸铜不得不囤放于上海保税区仓库。较长时间以来，上海保税区铜库存数量超过国内完税铜库存数量和LME全球仓库库存的总和。而因为上海期铜不允许境外企业参与，上海期铜价格无法为关外的保税区铜贸易作价。作为境内（而关外）的上海保税区铜贸易，却要选用LME美元价格加CIF到岸美元升水的形式来作价。

每年我国企业和国外供应商的电解铜年度供应长单以及铜精矿加工费的年度长单谈判，是行业最艰难的话题。也因此才有了CSPT（中国铜冶炼企业采购小组）联合国内主要铜冶炼企业和国外铜矿供应商谈判价格。

国际铜交易机会

作为国内知名度最高和国际影响力最大的期货合约，多年来，上海期铜和LME期铜之间存在着非常活跃的套利交易。铜期货的跨境套利交易存在长达三十年之久，然而由于内外资本市场的割裂和人民币不能自由兑换的限制，跨境铜的套利更多时候由于价格单向的大幅波动对于资金管理和风险管控的压力而使套利交易风险陡增。

通过能源中心国际铜合约，原有的上海期铜和LME铜之间阻隔将被打通，外资参与我国铜期货市场也将畅通无阻。这意味着在上海期铜和国际铜之间将存在无跨境障碍、无汇率风险的套利交易。笔者认为，在市场力量充分参与、各方博弈充分的情况之下，即上海期铜和INE国际铜之间的无障碍套利充分发生，同时INE铜和LME铜之间围绕着INE价格隐含的CIF美元升水的套利和物流充分发生的情况下，不远的将来，上海期铜、INE国际铜以及LME美元铜之间的相对价格将处于非常高效和扁平的区间波动。这将显著改善国内铜进口企业以及铜冶炼企业的成本控制和利润状况。而在市场各方力量参与尚未充分，即国际铜上市之初的6—12个月，将是“聪明资金” 套利的最理想的时机。

国际铜市场展望

上海国际能源交易中心国际铜合约交割标的物为上海保税区的A级阴极铜，人民币净价交易的合约将为现有保税区铜库存的贸易实现人民币定价，同时这些铜的现货贸易商多了一个国家信用级的交易对手——上海国际能源交易中心，这将极大地提高保税区铜现货贸易的流动性。

随着国际铜合约在远期月份上流动性的提升即远期曲线的形成，海运贸易铜乃至长单贸易铜的合约定价也会逐步参照国际铜远期合约价格来定价。一年或者两年后的今天，当Codelco（智利国家铜业公司）报出类似今天给我国客户2021年长单价格88美元升水的时候，我国客户会提醒南美供应商参照（对应其所隐含的美元升水）乃至采用INE国际铜人民币的价格来作价他们之间的贸易合同。

与此同时，据了解，国外的大型矿山和主流贸易商也在密切关注该合约的进展。未来由于国际铜这根“管道”的存在，上海期铜、INE国际铜和LME铜的价格之间的价格倒挂将会大大缩小，而这将使我国铜冶炼企业有动力和其原料供应商协商按照INE国际铜来定价其原料采购合同，既减少了原料高买产品低卖的损失，同时以人民币来结算也避免了外汇波动的风险和外汇保值的摩擦损失。