Due to record highs of copper, the London Metal Exchange has introduced measures to maintain “orderliness and continued liquidity”. In context, the price of copper per tonne has now reached $1,000. The previous high for the market had been $330 per tonne in 1996-97.
Such is the dire situation for the market, Bloomberg correspondent Javier Blas claimed matters had become “beserk”.
Emergency measures have been introduced tonight such as new lending rules, “backwardation limits” and deferred delivery.
Mr Blas said: “The London Metal Exchange has introduced emergency measures to ensure ‘orderliness and continued liquidity’ in the copper market.
“Among them, the LME has set limits on the nearest-term spreads and allowances for holders of some short positions to avoid delivery of metal.”
“I’m sure the UK financial regulator is absolutely on top of the situation, right?
“That’s to be expected when a key commodity traded in a London market goes berserk, forcing the exchange to some pretty dramatic emergency measures in a late evening intervention.”
According to Bloomberg, the spark in the crisis was the withdrawal of copper from warehouses.
The withdrawal was enacted by the Trafigura Group which has sparked a large swing in prices.
JUST IN: Brexit LIVE: Boris vows to ‘fix’ hated ‘problem’ in deal
“Prior to this, the physical backdrop to copper had seemed much more benign then the likes of zinc.”
Despite the high prices, copper is expected to inflate even further in the coming years due to the demand in electric vehicles and renewable energy sources.
Aluminum has also risen in price on the stock market.
On October 5, the metal was priced at $2,921 per tonne.
The metal has now inflated to $3,617 per tonne on the stock market.
This is a record over the last three years after falling to $1,474 per tonne on November 11.
According to analysts, the rise in the cost of aluminum is caused by a shortage of thermal coal in China and a general increase in energy prices.