Copper is often overshadowed by gold and silver, yet the market is currently highly dynamic and creating opportunities for investors who want straightforward, secure access to the commodity. “Compartments under Luxembourg law make it simple to gain exposure to the copper price without investors having to grapple with issues such as custody or collateralisation”, says Daniel Knoblach, Board Member at Super Global Services SA.
A range of opposing forces is influencing the copper price. After the United States imposed the announced import tariffs on this key industrial metal, prices initially stabilised. At the same time, demand growth from China has slowed since the spring. On the supply side, Chile, a major producer, is likely to extract significantly less ore this year than previously forecast. As a result, the copper price in London briefly rose to its highest level since March at the beginning of September. “In the short term it is difficult to predict price moves in such a complex environment, but over the medium to long term, demand for copper, and probably the price as well, should increase”, says Knoblach. “Against this backdrop we are experiencing growing interest from institutional investors.”
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How investors take copper exposure varies by mandate and strategy. Some target a single-commodity view, while others use copper within a broader commodities basket to diversify portfolios. In every case, the key question is implementation. “Institutional investors typically look for instruments that are both safe and easy to use”, Knoblach notes.
Luxembourg-law compartments provide a practical, low-complexity route to implement copper exposure. Within a matter of weeks, a compartment can be set up to track price developments on the London Metal Exchange (LME), for example. “Physical collateralisation of copper and secure storage can be embedded within the compartment structure, which takes the operational burden off the investor”, says Knoblach.