Direct Effect of TC on the LME Copper Prices

Byungkwon Lim, Hyeon Sook Kim and Jaehwan Park ()
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Byungkwon Lim: Korea Housing Finance Corporation, Pusan 48400, Korea
Hyeon Sook Kim: Public Procurement Service, Daejeon 35208, Korea

Economies, 2020, vol. 8, issue 2, 1-9

Abstract: The motivation of this paper is to identify the effect of treatment charge (TC) on LME (London Metal Exchange) copper prices. It is a fundamental variable as a supply side factor, because it is related to the smelting process and reflects the level of concentrates market tightness. To examine this question carefully, the regression model is applied. This paper finds a statistically significant negative link between TC and LME copper prices. It is found that a 10% increase in TC of copper decreases in copper return by 1.8%. Subsequently, the vector autoregression (VAR) model is introduced to consider the impact of TC to copper prices as a permanent effect. It is found that the negative impact of the TC to copper returns dies out quickly. The statistical estimation in this article will provide a good reference for future study.

Keywords: copper spot price; treatment charge; impulse response; speculation; C3; G1 (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jecomi:v:8:y:2020:i:2:p:36-:d:354984

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