Speculators absorb the risk that commercial hedgers cannot, or will not, incur. Metals volume has grown consistently in the overnight session, adding liquidity to the market and letting traders take advantage of opportunities that may develop after the trading floor closes in the afternoon. The link with Sydney now creates another pool of potential market participants, that can only add to the liquidity of the copper market. Any increased trading activity that results will only benefit the market at large, making it even more efficient. The North American copper industry regards it as the reliable pricing indicator for this market, which tells me that we are largely fulfilling our mission.
Investors participate, too, enabling commercial hedgers to transfer their risk.
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