Mr. Copper

Who Is Mr. Copper?

Mr. Copper used to be as soon as a popular nickname for Yasuo Hamanaka when he used his position as head of the metal-trading division of the Eastern purchasing and promoting company, Sumitomo, to corner the world copper market.

Understanding Mr. Copper

Mr. Copper, or Yasuo Hamanaka, rose to prominence throughout the mid-1980s by the use of making Sumitomo the largest copper broker in the world as a result of aggressive and illegal investment strategies in copper futures and alternatives. At one stage Hamanaka controlled 5% of the world’s copper supply, which proffered him every other nickname: Mr. 5 %. Hamanaka used to be as soon as reportedly in particular pleased with this latter nickname, as it used to be as soon as a name moreover associated with famed oil broker Calouste Gulbenkian.

Quicker than being revealed since the rogue broker who used to be as soon as in the end liable for $2.6 billion in losses for Sumitomo, Hamanaka used to be as soon as extensively admired for his copper market investment strategies, which made Sumitomo a world leader in copper without reference to the fact that the company had no copper mines of its non-public.

Ultimately, Hamanaka used to be as soon as convicted of fraud and forgery and jailed for seven years, and while Sumitomo denied knowledge of Hamanaka’s illegal purchasing and promoting process, the company in the end paid out $150 million to settle claims with regulators.

How Mr. Copper Cornered the Commodity Market

Hamanaka used to be as soon as in a position to handily manipulate the copper market because of he had got a large number of futures contracts for Sumitomo, over and above their essential holdings of physically copper. Because of copper is an illiquid commodity, the 5% copper holdings of Sumitomo put them in a dominant world position, essentially giving them the power to control the world copper value during the London Metal Business. Hamanaka used his power to his advantage, relying on cash and maintenance of long positions in copper to energy out buyers who tried to transient the commodity. While Hamanaka’s market manipulations were not unusual knowledge among traders, the London Metal Business used to be as soon as not required to report on positions, and so wisdom revealing Hamanaka’s precise stage of control used to be as soon as not available to end up his movements.

Additionally, Sumitomo used to be as soon as in a position so that you can upload to their general source of revenue by means of commissions on transactions. The a lot of bump is as a result of the price of copper being artificially top for this kind of long time frame.

This all began to be revealed after market necessities changed throughout the 1995, and an increase in copper supply laid the ground for a market correction. Sumitomo’s long positions in copper at the time made for the most important felony duty to the company, and it used to be as soon as in 1996 that Hamanaka’s rogue purchasing and promoting used to be as soon as revealed.

Inside the aftermath, rules established by the use of the London Metal Business have eliminated the opportunity of a repeat of this kind of commodities market cornering.