Posted on 28/02/2008 in category Non-Ferrous

Non-Ferrous Metals Division world-wide monthly market updateby Bob Stein, President of the BIR Non-Ferrous Metals Division

Change for the worse

There is no doubt in anyone's mind that hedge funds play what is probably now the primary role in the price discovery process of copper. Speculative in nature and mostly showing disregard for the fundamental aspects of our business, these funds add liquidity but also a dramatic degree of volatility to our markets. Clearly, they've changed the way we do business, and for those of us in the physical markets, it's for the worse.

The funds are driven by very complex computer programs designed by today's best computer engineers, and while they do incorporate some fundamental considerations in the make-up of their programs, it makes me wonder if the same technologies couldn't be used in the direct trading of scrap (given that they have a severe impact on the way scrap is traded currently).

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