Chinese Copper Research Articles

An analysis of the market efficiency of the Chinese copper futures based on intertemporal and intermarket arbitrages

This paper studies the market efficiency and relevant issues of the copper futures traded on the Shanghai Futures Exchange (SHFE) in China. Since its listing, the market, grown unceasingly in scale and internationalization level, has become the largest copper futures trading market in the world (the London Metal Exchange (LME) copper futures market is the second largest). Using the data from 2006 to 2022 as a sample, a period covering the outbreak of the COVID-19 pandemic and the internationalization of the Chinese copper futures, this paper analyzes the market efficiency of China’s copper futures based on both intertemporal and intermarket strategies (SHFE Copper Futures and LME Copper Futures, with considering time difference factor). To better reflect the actual situation, this paper, when establishing trading strategy models, not only took into account various actual trading factors such as transaction costs, market impact costs, liquidity costs, margin, and capital costs but also combined daily and high-frequency data to present highly practical arbitrage strategies. According to empirical results, overall, it was not found significant arbitrage opportunities to violate the market efficiency rule. Although some arbitrage opportunities indeed emerged, they were infrequent, especially when transaction costs were considered. Specifically, in terms of the intertemporal strategy, despite that infrequent arbitrage opportunities did appear in the SHFE copper futures market, they failed to bring substantial gains, some of which even caused losses in extreme cases. In terms of the intermarket strategy, there is a cointegration relationship between the logarithmic price of LME copper futures and the logarithmic price of SHFE copper futures. The average annualized rates of return in the results of the in-sample empirical analysis were high, but in the out-of-sample empirical analysis of high frequency and daily data were not found significant arbitrage opportunities. The influence between the LME copper futures market and the SHFE copper futures market was bidirectional.

Research on the Copper Futures Market in China

This paper examines the role of copper futures in China's financial market, listed in the Shanghai Futures Exchange (SHFE) in 1991 as the first nonferrous metal futures commodity. Today, it is one of the well-developed and mature futures contracts in the Chinese commodity futures market. We analyze the current situation of the Chinese copper market, both spot and futures, along with the role of hedging with copper futures in the whole copper industry chain and the role of copper futures in the spot market. The results show that hedging with copper futures is significant for metal enterprises from all parts of the copper industry chain as an essential tool to offset price risks and for stable development; it also optimizes resource allocation in the economy and improves the efficiency of Chinese metal enterprises.

Aortic regurgitation of the quadricuspid aortic valve: An ancient Chinese copper coin sign

Aortic regurgitation of the quadricuspid aortic valve: An ancient Chinese copper coin sign

A comparative exploration of the chaotic characteristics of Chinese and international copper futures prices

This study used a C–C method to reconstruct the phase space of copper prices from January 2002 to December 2021, using Chinese and international copper futures price time series as a sample. It demonstrates the differences in the chaotic characteristics of two copper futures prices through recurrence plots and correlation dimensions. Recurrence complex networks have been employed to quantify the spatial structural similarity between the variables and copper prices, and the main factors influencing the structural changes in copper prices have been analysed by a systematic bifurcation mechanism. The results show that the efficiency of the copper futures market has improved gradually. The level of perfection and efficiency of the Chinese copper futures market is lower than that of the international copper futures market, and the predictability of Chinese copper futures prices is even weaker, which means that the investment in Chinese copper futures is riskier than that in the international copper futures market. Compared to other metal futures, such as aluminium and nickel, copper futures are likely to be a lower risk investment. The US dollar index, the federal funds rate and the price of gold are the main factors influencing changes in the spatial structure of copper prices in China, while political risk, crude oil and gold prices are key to shaping the chaotic character of international copper prices. A tipping point in the chaotic state of copper prices could correspond to the onset of a global financial crisis. This study can help policymakers to understand the market laws underlying prices and thus create robust and well-traded markets by controlling the chaotic characteristic structure of copper prices. In addition, the identification of chaotic state thresholds in Chinese and international copper prices can predict the occurrence of unexpected events such as financial crises, which is important to counteract financial market risks.

Evidence of arbitrage trading activity: The case of Chinese metal futures contracts

Several unique insights are documented based on a study of selected metal futures contracts traded in the U.S. and China. Based on our unique measures, we present intra market evidence that the U.S. gold and silver futures markets reflect a fully arbitraged market and U.S. copper nearly so. In contrast, the Chinese gold and silver futures markets appear to reflect an un-arbitraged market whereas the Chinese copper market is characterized as somewhat arbitraged. We explore various reasons for this evidence as well as document the differences in gold, silver, and copper futures markets between China and the U.S.

A Brief Analysis of Sustainable Progress of Innovative Research & Development of Chinese Copper Processing Firms—With Japanese Furukawa Electric as a Standard

In comparison with copper processing industrial leader Furukawa Electric Co., Ltd., Chinese copper processing industry faces many shortcomings and difficulties including but not limited to outdated equipment and technologies, low degree of specialization, and unstable product quality. The review of Furukawa Electric’s development milestones reveals that Chinese copper processing industry has reached a stage in which it must rely on technological research and development (R & D) to promote sustainable productivity. Chinese copper processing firms have to invest in R & D to promote sustainable technological innovations and to improve the precisions of business practice in order to ensure the firms’ improvement.

Железный век Приольхонья в I тыс. н. э. (по материалам стоянки Саган-Заба II)

For the first time in the Baikal region, at the multilayered site Sagan-Zaba 2 (the western coast of Lake Baikal), it was possible to distinguish several layers of different periods of the Iron Age (upper 3–1 cultural layers) in clear stratigraphic conditions. The criteria for identifying the cultural complexes were their stratigraphic position, morpho-typological features of the inventory, and a comparative analysis with the materials of burial and memorial objects of the studied epoch. Particular attention is paid to the issues of chronometry based on a series of AMS radiocarbon dates. Based on interdisciplinary research, the age of the upper layer 3 (with Yelga pottery type) was determined in the range of 1980–1530 cal BP (1st –4th centuries AD). We can clarify the dating of this complex to the 1st century AD, considering the find of a fragment of Chinese copper coin Dàquán wǔshí (in use in China from 9 to 14 AD), that probably was transferred from this layer to the overlying one. Judging by radiocarbon dating, there are no obvious chronological differences between layer 2 (1180– 940 cal BP) and layer 1 (1240–960 cal BP). Nevertheless, given the presence in the materials of layer 2, along with pottery decorated with an arched ornament and a horseshoe-shaped stamp, vessels of the Cherenkhyn pottery type, it is possible to expand the dating of this complex and define it as the period of the 5th–10th centuries AD. The complex of layer 1 (only with pottery with an arched ornament and a horseshoe-shaped stamp) is attributed to the 8th–10th centuries AD. Planigraphic analysis suggests that the sites had a limited range of activities and were used for a relatively short time. The complex use of natural resources throughout the Iron Age is noted. The economic structure of the population of the Olkhon region in the 1st millennium AD was based on cattle breeding, hunting for wild animals and, to a lesser extent, on fishing. The predominance of seal bones in the Sagan-Zaba 2 suggests a specialized nature of the sites aimed at the prey of this animal. As a result of studies carried out at the Sagan-Zaba 2 site, it became possible to characterize the cultural complexes of different periods of the Cis-Olkhon region during the Iron Age not only by the burial and ritual complexes, but also by the materials of the settlements.

A game theory application in the copper market

Mongolia has a small open economy that is growing due to its status as one of the major copper exporters in the Asian copper market. We used game theory to analyze the Chinese copper market and determine the competitive strategies used by Mongolian exporters. We show that a variational inequality approach is one option to prove that game theory is applicable in the analysis of the Chinese copper market, as it is spatial and concentrated. To solve the profit maximization problem with a concave objective function for each player and linear strategy set, it can be reduced to variational inequalities. Numerical calculations allow us to predict the responses of certain parameters against external factors or so-called non-economic shocks, such as changes in Chinese import policies, strikes in Chile, etc. In the future, if Mongolia builds a new copper smelter, it will be a competitor within a more concentrated market than that of the current copper concentrate trade. Thus, the importance of developing such a model is increasing.

Evidence of Arbitrage Trading Activity: The Case of Chinese Copper Futures Contracts

Several unique insights are documented based on a study of copper futures contracts traded in the U.S. and China. Based on our unique measures, we present evidence that the U.S. gold and silver futures markets reflect a fully arbitraged market and U.S. copper nearly so. In contrast, the Chinese gold and silver futures markets appear to reflect an unarbitraged market whereas the Chinese copper market is characterized as somewhat arbitraged. We explore various reasons for this evidence as well as document the differences in gold, silver, and copper futures markets between China and the U.S.

Assessing the future environmental impacts of copper production in China: Implications of the energy transition

Copper demand in China is expected to grow considerably over the coming decades, driving energy use and environmental impacts related to copper production. To explore the environmental impacts of copper production in China, we used a variant of Life Cycle Sustainability Analysis that combined the Life Cycle Assessment methodology with the Chinese copper demand projections from 2010 to 2050. The results indicate that the environmental impacts of pyrometallurgical copper production are expected to increase more than twofold during this period and remain the largest contributor to the environmental footprint. Secondary copper production emits the least pollutions. Increasing the share of secondary copper production is the most environmental friendly option for copper production. To this end, China may focus on improving the classification of waste copper products and recycling infrastructure for end-of-life management. Hard coal use and production are crucial contributors to climate change in the context of copper production. Cleaning up copper production processes and improving energy efficiency would also help reduce environmental impacts. Energy transition can significantly reduce the environmental impacts of copper production, but it also can increase copper requirement.It does not visibly contribute to reduce human toxicity as well.

Scenarios for anthropogenic copper demand and supply in China: implications of a scrap import ban and a circular economy transition

Copper is widely used in buildings, transportation and home appliances, resulting in steadily increasing demand in China. From 2013 on, China has implemented the “Green Fence” policy to restrict copper scrap imports, which have affected and will continue to affect its future copper supply. To explore how China's copper demand can be met in the future, including the effects of the “Green Fence” policy change, in this paper a stock-driven approach is combined with a scenario analysis. We compare two scenarios (Continuity Policy, Circular Economy) and assess the influence of the “Green Fence” policy on each. We conclude that effective measures to prolong product lifetime could lead to a significant reduction in copper demand. Given the limited scope for domestic mining, China will still have to depend largely on imports of primary material in the form of concentrates and refined copper or, otherwise, put major emphasis on its recycling industry and continue to import high-quality copper scrap. In combination with the establishment of a state-of-the-art, efficient and environmentally friendly recycling industry, secondary copper could satisfy the bulk of Chinese copper demand and this could be an opportunity for China to transition to a more circular economy with regard to copper.

Volatility–volume relationship of Chinese copper and aluminum futures market

Abstract Following Bessembinder and Seguins, trading volume is separated into expected and unexpected components. Meanwhile, realized volatility is divided into continuous and discontinuous jump components. We make the empirical research to investigate the relationship between trading volume components and various realized volatility using 1 min high frequency data of Shanghai copper and aluminum futures. Moreover, the asymmetry of volatility–volume relationship is investigated. The results show that there is strong positive correlation between volatility and trading volume when realized volatility and its continuous component are considered. The relationship between trading volume and discontinuous jump component is ambiguous. The expected and unexpected trading volumes have positive influence on volatility. Furthermore, the unexpected trading volume, which is caused by arrival of new information, has a larger influence on price volatility. The findings also show that an asymmetric volatility–volume relationship indeed exists, which can be interpreted by the fact that trading volume has more explanatory power in positive realized semi-variance than negative realized semi-variance. The influence of positive trading volume shock on volatility is larger than that of negative trading volume shock, which reflects strong arbitrage in Chinese copper and aluminum futures markets.

The Chinese copper cycle: Tracing copper through the economy with dynamic substance flow and input-output analysis

Abstract China has become a major user of copper as well as a producer of copper containing products. We present a dynamic model of Chinese copper stocks and flows in the period from 1990 to 2015. The model results indicate that China's per-capita in-use copper stock has grown from about 7 kg in 1990 to close to 60 kg in 2015. At the same time, total copper imports have increased from approximately 0.65 Mt per year to close to 10 Mt. One of the peculiarities of the Chinese copper cycle is that a comparatively large fraction ( ≈ 1,4 Mt) of these imports are made up of scrap, which China re-processes into new products. At the same time, China has relatively low domestic recycling efficiencies. The substance flow perspective is extended with national accounting data, which allows for a portrayal of the interconnection between copper flows and the wider economic structure. It is thus possible to identify the economic sectors which not only directly but also indirectly require copper for the provision of their goods and services.

Analysis of Optimal Hedging Ratio of Copper Futures Based on ECM Model

In this paper, on the one hand, we need to prove that there is a cointegration relationship between copper futures price and spot price. Then, using the ECM model to estimate the optimal hedging resale value of copper futures contract in our country, it is based on the frequency statistics method, the optimal hedging strategy, the approach does not consider the existence of risk estimation, and the most natural way to solve this problem is the bayesian method. So, on the other hand, we are under the bayesian framework, Gibbs sampling method is used to the Chinese copper futures market, the optimal hedging strategy has carried on the empirical analysis. By comparing the hedging efficiency, the result of hedging based on Bayesian statistics is better than that based on frequency statistics.

Convenience yield of accessible inventories and imports: A case study of the Chinese copper market

Inventories have traditionally been regarded as key measures to respond to market risks. Although benchmark exchanges are increasingly important, their inventories actually utilized are those in the local markets. The perspective that we benefit from the inventories that are available and in proximity is conceptualized as the accessibility of inventories. To explore the accessibility issue, this study analyzes the convenience yields of the Chinese domestic copper market for the period of January 2011 through April 2015. The results indicate that local markets benefit from and are influenced by accessible inventories, but not from less accessible inventories. Furthermore, imports act as inventory inflows, which can be considered the movement of the accessible inventories that provide convenience yields to local markets. In addition, we show that volatility is the central difference between the cost-of-carry and option pricing models, which are representative estimation methods for convenience yields.

A Novel Ancient Coin-Like Fractal Multiband Antenna for Wireless Applications

This study proposes a novel square-circle structure fractal multibroadband planar antenna, similar to an ancient Chinese coin-like structure, for second generation (2G), third generation (3G), fourth generation (4G), WLAN, and navigation wireless applications. The device is based on the principles and structural features of conventional monopole antenna elements, combined with the advantages of microstrip antennas and fractal geometry. A fractal method was presented for circular nested square slotted structures, similar to an ancient Chinese copper coin. The proposed antenna adapted five iterations on a fractal structure radiator, which covers more than ten mobile applications in three broad frequency bands with a bandwidth of 70% (1.43–2.97 GHz) for DCS1800, TD-SCDMA, WCDMA, CDMA2000, LTE33-41, Bluetooth, GPS (Global Positioning System), BDS (BeiDou Navigation Satellite System), GLONSS (Global Navigation Satellite System), GALILEO (Galileo Satellite Navigation System), and WLAN frequency bands, 16.32% (3.32–3.91 GHz) for LTE42, LTE43, and WiMAX frequency bands, and 10.92% (4.85–5.41 GHz) for WLAN frequency band. The proposed antenna was fabricated on a 1.6 mm thick G10/FR4 substrate with a dielectric constant of 4.4 and a size of 88.5 × 60 mm2. The measurement results reveal that the omnidirectional radiation patterns achieve a gain of 1.16–3.75 dBi and an efficiency of 40–72%. The good agreement between the measurement results and simulation validates the proposed design approach and satisfies the requirements for various wireless applications.

Pricing Mining Concessions Based on Combined Multinomial Pricing Model

A combined multinomial pricing model is proposed for pricing mining concession in which the annualized volatility of the price of mineral products follows a multinomial distribution. First, a combined multinomial pricing model is proposed which consists of binomial pricing models calculated according to different volatility values. Second, a method is provided to calculate the annualized volatility and the distribution. Third, the value of convenience yields is calculated based on the relationship between the futures price and the spot price. The notion of convenience yields is used to adjust our model as well. Based on an empirical study of a Chinese copper mine concession, we verify that our model is easy to use and better than the model with constant volatility when considering the changing annualized volatility of the price of the mineral product.

Risk contributions of trading and non-trading hours: Evidence from Chinese commodity futures markets

This paper examines the overall risks in Chinese copper, rubber, and soybean futures markets using a copula-VaR (value at risk) and copula-ES (expected shortfall) framework that explicitly accounts for both trading and non-trading information. Our results show that information accumulating during non-trading hours contributes substantially to overall risks, with non-trading VaR weights exceeding 40% in all these markets. In particular, the information during non-trading hours is more important than the information during trading hours in explaining the total risk of all three futures as measured by ESs and volatility weights. Moreover, the risk due to non-trading information increases with the length of non-trading periods, reflecting the fact that information accumulates continuously over time.

Analysis of copper flows in China from 1975 to 2010

By applying substance flow analysis (SFA), the paper attempts to illustrate how copper utilization pattern has changed in the anthroposphere of China from 1975 to 2010. An analytical framework is firstly established and the detailed copper cycles of the specific years 1975, 1985, 1995, 2005 and 2010 are then characterized. Major conclusions include the following: (1) Chinese copper industry has made significant progress driven by large domestic copper demand since 1970s, especially after 1990s. Also the structure of copper industry has shifted from a basic industry to a processing industry. The share of secondary copper production in total refined copper has risen from 20% in 1975 to 38% in 2010; (2) the Chinese society has experienced a rapid copper accumulation since 1990s. The annual input flow to use stage jumped from only 334Gg (that is 0.36kg per capita copper consumption) in 1975 to 7916Gg (5.90kg per capita) in 2010; (3) a large amount of copper has to be imported to meet the huge demand, mainly involving in copper concentrate, refined copper and copper scrap. And the NIR (Net Import Ratio) of the three was 53.0%, 38.7% and 63.0% in 2010, respectively; (4) domestically produced copper scrap increased from 74.5Gg in 1975 to 711.2Gg in 2010. Comparing it with import scrap and domestic new scrap we found that at current stage the in-use stock is still too small to generate high quantities of copper scrap for domestic secondary copper production. (5) Major copper losses occurred through copper Mining, Refining and WM&R, with the Mining exhibited the lowest copper utilization efficiency (CUE) among the three processes, and may have the great potential for increasing copper utilization rate in China.

A Research on the Risk Measure of Chinese Copper Futures Market Based on VaR

Measuring the risk of the Chinese Copper futures market is the key point of the risk management. Based on the normal distribution, T-distribution and GED-distribution, this paper measures the VaR values of the risk of the copper futures by GARCH and EGARCH models. Using empirical testing, it shows the EGARCH-N model can characterize the market risk of the copper futures more precisely than other types of models.