Buildouts Bulletin: Copper Price Speculation Rolled Back
As reported here in The Source in January, copper prices affecting budgets containing plumbing conduit and electrical buildout were undergoing a series of gyrations and increases some linked to the trading in physical copper by investment banks. Following the SEC approval of investment banking giant JPM Chase’s creation of a fund called JPM XF Physical Copper Trust to trade physical copper, members of the copper user community including two wire companies lobbied the SEC to stop the trading, claiming it would artificially tighten supply and raise prices.
They were rebuffed by the SEC in March. But as with so many other areas under the SEC’s purview, what that regulatory body will allow and what’s good for the world beyond Wall Street have been determined to be at odds.
In a Friday night story published by Reuters and written by David Shepard and Jonathan Leff, JPM Chase announced it would be getting out of the physical commodities business. After a week of intense Congressional scrutiny of the banking industry’s non-capital-allocation activities, plus a spate of media coverage concerning banking’s involvement in the market for physical aluminum, JPM Chase quietly reversed its path, perhaps deciding to focus more on capital allocation than trying to turn everything under the sun into gambling chips.
JPMorgan Chase & Co is exiting physical commodities trading, the bank said in a surprise statement on Friday, as Wall Street’s role in the trading of raw materials comes under unprecedented political and regulatory pressure.
After spending billions of dollars and five years building the banking world’s biggest commoditydesk, JPMorgan said it would pursue “strategic alternatives” for its trading assets that stretch from Baltimore to Johor, and a global team dealing in everything from African crude oil to Chilean copper.
The firm will explore “a sale, spinoff or strategic partnership” of the physical business championed by commodities chief Blythe Masters, the architect of JPMorgan’s expansion in the sector and one of the most famous women on Wall Street.