Copper Glossary
The language of the trade. Master these terms to understand market reports.
Backwardation
A market condition where the spot price of copper is higher than the futures price. This typically signals a physical shortage of the metal available for immediate delivery.
Contango
The opposite of backwardation. Spot prices are lower than futures prices, indicating ample supply. The higher futures price accounts for the cost of storage and interest.
Cathode
Pure copper (99.99%) in the form of flat sheets, produced by electrowinning or refining. This is the primary raw material traded on the LME.
TC/RCs (Treatment and Refining Charges)
The fees miners pay to smelters to turn their ore concentrate into metal. When ore supply is tight, TCs go down (miners have leverage). When ore is plentiful, TCs go up.
Grade Drift
The phenomenon where the average percentage of copper in mined ore decreases over time as rich deposits are exhausted. This increases the cost of production.
SX-EW (Solvent Extraction and Electrowinning)
A two-stage hydrometallurgical process used to extract copper from oxide ores. It produces LME-grade cathode directly without smelting.
Green Capex
Capital expenditure dedicated to energy transition technologies (wind, solar, EVs), which is a primary driver of structural copper demand.
LME (London Metal Exchange)
The world center for the trading of industrial metals. The LME price is the global benchmark.
Porphyry
A type of geological deposit that contains the majority of the world's copper. These are massive, low-grade deposits amenable to open-pit mining.
Arbitrage
Buying copper in one market (e.g., LME in London) and selling it in another (e.g., SHFE in Shanghai) to profit from price differences.
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