OREANDA-NEWS. November 24, 2010. Effective November 24, 2010 FORTS, the derivative market of RTS, will start trading a new futures contract, a futures contract on copper (Trading symbol CU).  The contract is cash-settled, with the underlying asset for the contract the price on Grade A copper on the global market indicated in the LME trading system.

The launch of this instrument turns a new page on the Russian stock exchange market, as this is the first industrial metal contract on the exchange. The copper futures contract is designed for both investors wishing to make returns due to the positive trend on the copper market and diversifying their investments, and also large Russian copper producers and consumers wishing to hedge their risks against price fluctuations on the market of copper and copper products. This last group relates to all the enterprises of the mining and smelting, cable and electronics manufacturing industries.

According to Evgeny Serdyukov, Director of the Futures & Options Market at OJSC RTS: ‘The copper futures contract will extend the possibilities of financial companies and investors to invest temporary available funds. The contract will interest financial market participants and private investors due to the high levels of volatility in the market. It also allows companies of the mining and smelting, cable and electronics manufacturing industries to manage market and currency risks while executing deals on copper market".

Representatives of industrial companies support the implementation of this futures contract onto exchange trading. Maksim Tretyakov, General director of "Elkat" plant  said: ‘The issue of market risk management and protection from the growth of prices on raw materials is very urgent for companies in the copper and cable industries. Historically, copper prices have been tied to exchange market prices and this fact relates to the price and currency risks attached to us. Companies in the cable industry need this Russian stock exchange instrument, as it  will help to reduce these risks’.

Global copper market volume amounts to 16 million tons per year. Asia is the main region for copper consumption, with 50% of total global volume of copper production. The main copper consumer is China (21% of global consumption). The main copper producers are Chile (16% of global production), Peru and the USA.

Prices on copper have increased by 33% during 2010, while price volatility levels reach 50% per year.