Why Is It So Hard to Find a Genuine Copper Cathodes Supplier?
Copper is already scarce, production is capital-hungry, and nobody with inventory will sell 1 000 t per month at 25 % below LME and wait for a DLC; real trades share price risk, deploy working-capital lines and involve banks, insurers and logisticians from day one.
Copper is already scarce, production is capital-hungry, and nobody with inventory will sell 1 000 t per month at 25 % below LME and wait for a DLC; real trades share price risk, deploy working-capital lines and involve banks, insurers and logisticians from day one.
The Infinite-Arbitrage Fantasy
A mandate offering 1 000 metric tonnes of Grade A cathodes every month, FOB or CIF, at a 25 % discount to the LME cash price with payment only after inspection looks like free money. If such a spread really existed, one could buy, flip and repeat indefinitely—an obvious impossibility in any functioning market.
Market Tightness and Production Realities
Global demand for refined copper is projected to rise sharply through 2040, yet new mines and smelter expansions lag far behind that curve. LME headline stocks sit near multi-year lows, and cash-to-three-month spreads have swung into backwardation. In this environment, holders of physical metal do not accept large discounts, nor do they warehouse multi-million-dollar inventories waiting for an unknown buyer.
Why a DLC-Only Structure Fails
A deferred letter of credit shifts all price and performance risk onto the seller while tying up their balance sheet for at least two weeks. During that window LME prices can move by hundreds of dollars per tonne, eroding margin. Legitimate sellers require working-capital funding—prepayment, red-clause LC or a sizeable deposit—matched with hedges. Posting a stand-by DLC after warehouse inspection adds no liquidity, so serious suppliers will walk away.
How Traders Keep Copper Moving
Moving cathodes from a smelter to an end-user involves advance payments to the producer, freight bookings, hedging on the LME, storage, insurance and often currency swaps. Structured trade-finance tools—prepayments, borrowing-base revolvers, receivables discounting—bridge that working-capital gap. Traders earn their spread by taking these risks and orchestrating the flow, not by waiting for a post-delivery DLC.
Building a Transaction That Works
Buyers able to commit to volume should engage early with structured-trade specialists, lenders, insurers and inspection firms. Pre-payment or tolling contracts matched with LME hedges are standard, transparent and bankable. For a concise overview of these mechanisms, see “Prepayments Demystified – Commodities Demystified” .
