A veteran metals trader known for bold aluminum bets has returned to the market with a major copper play on the London Metal Exchange. Sonny Mc Ness, who left Mercuria Energy Group earlier this year, is now head metals derivatives trader at Hartree Partners LP. Over recent weeks, he has bought large volumes of October-delivery copper contracts while taking a short position in November futures, according to people familiar with the matter. Hartree's position was the largest of several big bets built up in October-delivery contracts. The trades would profit from a squeeze on short-term supplies, which traders say is likely if US President Donald Trump announces long-threatened tariffs on refined copper.
Mc Ness is well known in the clubby world of metals traders for bets that have rocked the LME over the years and even prompted the exchange to modify its rules. At JPMorgan Chase & Co. and Mercuria, he focused largely on aluminum. Mc Ness and a Hartree spokesperson declined to comment. Trading in the October-November spread turned highly volatile before the October contract expired, with October trading as much as $91.99 a ton higher than November, a condition known as backwardation.
Whether Trump imposes tariffs is the central question for the copper market. Inventories in the LME's global warehouses have fallen sharply since May, as traders moved huge volumes of copper to the US in anticipation of import tariffs. Chinese import demand has also tightened supply. A large portion of the LME's metal is held in its US warehouses, so traders could profit by buying near-dated contracts and delivering metal against New York futures once new duties take effect. Some traders, however, question whether Trump will follow through, fearing prices could crash if he does not.
The LME says it has arrangements to guard against undue influence from large positions, including front-month lending rules, daily position reporting and accountability levels. The exchange declined to comment on specific positions.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing