The move by the US SEC, which comes after a two-year campaign by the US bank, is being reported as a defeat for consumers of the metal. The fund will use physical copper cathode as collateral against shares of the fund, effectively removing a chunk of metal from the market, and users fear it will affect supplies and inflate prices, according to a report by Reuters.
Giving its backing for the product, the commission said it did not believe the fund would disrupt the flow of copper for immediate delivery.
“The Commission does not believe that the listing and trading of the shares is likely to disrupt the supply of copper available for immediate delivery, which is what (the copper fabricators) predict would increase the price of copper,” it said in its ruling dated Friday and posted on its website on Monday.
Luvata, which makes heat-transfer products such a coil used in air conditioning and refrigeration equipment, was one of five physical copper users that joined forces to fight the proposal.
“It’s a sad day for industrial users and consumers. The outcome of the report is a nonsense,” said Luvata’s senior vice president of sourcing Bob Kickham in an interview.
