When I teach hedging I explain that when traders price a physical purchase, they sell futures against it; and when they price a physical sale they buy futures. This often prompts the same questions:

"If the flat price is hedged, how do traders make money?"

After my post on Forward Freight Agreements, someone sent me a message with a very good question:

“What if there is zero correlation between my freight route and any of the FFA markets?”

The Strait of Hormuz crisis has sent some freight rates to extraordinary levels that have impacted not just energy markets. But did you know that freight rates can be hedged?

What if the most effective copper tariff is one that is never annouced?

The US has accumulated a record copper stockpile while traders pay to wait for a decision on refined copper cathode tariffs.

The CME/LME arbitrage has recently traded between $400 - $800/mt CME over LME. Right now traders face a choice: lock in the arb and secure a margin or wait for a tariff announcement that could move that arb dramatically higher.

But with an LME Cash-3's backwardation approaching $200/mt, waiting has become extremely expensive. Financing $14,000/mt copper can cost around $80/mt/month.

CME stocks are already above 660KMT, while China is competing for the same cathode units and the Yangshan premium has reached a four-year high.

All this with no guarantee that any tariff announcement would allow enough time to move metal to the US before the duty became effective.

In my 2026 update to The Great Copper Arbitrage I look at:
The decision to execute arb or wait
Why copper is being pulled both west to the US and east to China
Trader positioning
How tariff uncertainty itself is building stocks in the US
Other physical constraints on the copper market

The great copper arbitrage is still alive, but it looks different in 2026.

How can a war breaking out thousands of miles away mean a more expensive hamburger?

Back in 2022 when Russia launched its full-scale invasion of Ukraine, multiple commodity markets repriced almost immediately. The ones that made the biggest headlines were in the energy complex. Europe was heavily dependent on Russian energy, and a combination of sanctions, buyers stepping away from Russian supply, disruption fears, and subsequent cuts to pipeline flows forced consumers to compete for alternative sources.

Oil, gas, power, and transport costs all increased. But the shock did not stop at energy.

Before the invasion, Ukraine accounted for approximately 15% of globally traded corn and was also a major exporter of wheat, barley, and sunflower oil.

When its main Black Sea ports were blockaded, large volumes of grain expected to reach the global market could no longer be exported through their usual routes.

In March 2022 alone, global maize prices rose by 19.1% and wheat prices by 19.7%. Crucially, a country did not need to buy its grain directly from Ukraine to feel the impact.

Commodity markets are interconnected. If a buyer can no longer obtain Ukrainian corn, it has to compete for corn from another origin. That additional demand pushes up prices elsewhere, transmitting a regional supply disruption across the global market.

Corn and barley are also important animal-feed ingredients. As grain, fertilizer, fuel, and transport became more expensive, livestock farmers faced rapidly rising production costs. In the US, beef-cattle feed prices were 16% higher year over year by May 2022.

These costs are not necessarily passed on immediately one-for-one. Farmers may initially absorb them through lower margins, substitute feed inputs, or reduce production. But, in a market such as cattle where production cycles are long, eventually this can mean tighter meat supply and higher prices further downstream.

And beef is only one part of the hamburger. There is wheat in the bun, vegetable oil in the sauces, diesel used to transport the ingredients, and energy required for processing, refrigeration, and cooking.

The war was not the only issue farmers had to contend with - drought, pandemic-related disruption, and labor shortages also created inflationary pressures.

But this case provides a perfect example of why I find commodity markets so fascinating. In physical commodity trading, every part of the global economy is linked.

Physical commodity deals tend to move more slowly than derivative trading. Negotiations take time to mature, but those physical flows ultimately affect the availability and cost of the products we use every day, impacting nearly every part of society.

Financing has become a much larger part of commodity-trading P&L.

For much of the period following the 2008 financial crisis, the largest commodity companies could borrow at extremely low rates. Financing inventory was still a cost, but it was rarely the factor that determined whether a trade worked.

LME aluminium, copper, and zinc are now firmly in a backwardation. With several threats to nearby supply, those backwardations could become considerably tighter before conditions improve.

One of the biggest misconceptions about commodity trading is that success comes from landing huge, spectacular trades.

In reality, the best trading businesses are built on far less exciting deals that are repeatable and reliable.

I'm currently enjoying some downtime with the family in London and couldn't help but notice the petrol price: £1.59/litre.

It made me think two things. First, Americans don't have much to complain about - £1.59/litre equates to about $8/gallon vs ~$4/gallon they are currently paying. Second, most people assume the price they pay at the pump should move dollar for dollar with the price of oil, but that's not exactly true.

The US is sitting on a hidden stockpile of zinc worth nearly $3bn.

Every modern US penny is made from 97.5% zinc and 2.5% copper. With an estimated 300 billion pennies currently in circulation in America, that equates to:

731,000 metric tons of contained zinc
19,000 metric tons of contained copper

Humans evolved to recognize patterns because our survival depended on it. Understanding how a predator moved could keep you alive. Recognizing where food was likely to be could help you find your next meal.

Following on from yesterday's post about provisional pricings comes a closely related concept - finalizations. But finalizations aren't just about price. Almost all physical contracts will require some form of finalization before they can be considered complete.

In physical trading it is common for an invoice to be issued before the final price of the material has been determined. In these situations, the seller raises an invoice using a provisional price.

Copper, nickel, aluminium, tin, zinc can all point to electrification, renewable energy, or AI as structural demand drivers. Lead, however, is one of the few major industrial metals where the energy transition is a structural headwind rather than a tailwind. The shift to electrification is creating a multi-decade boom for copper, but it is gradually eroding lead's largest end market - lead-acid batteries, particularly those used for internal combustion engine (ICE) vehicles.

Commodity prices are often influenced by speculation and headlines in the short term. Over the long term however, demand determines not only price, but investments and innovation across an entire industry. Understanding where demand comes from is just as important as understanding how much demand exists.

Refined lead's main end use is in the battery market. Batteries comprise around 90% of all global refined lead consumption. Of that demand, a large majority goes into automotive batteries, with a significant minority used in industrial applications such as telecoms, energy storage, and stationary backup power. Other markets such as radiation shielding, ammunition, extruded products, and alloys account for most of the remaining 10%.

Up until the push for EVs, the lead industry was fairly insulated from demand hits. A typical lead-acid battery needs replacing every 3-6 years depending on how much a vehicle is driven. This is due to age, heat, cold, and repeated charge/discharge cycles. Lead-acid batteries have the advantage of being nearly 100% recyclable so the lead is reclaimed and put back to work in a replacement battery. Demand for refined lead was highly predictable, almost boring.

So what happens when the largest consumption point for an entire metal faces replacement by a new technology?

Currently, a typical ICE vehicle uses a 12V lead-acid starter battery that will weigh between 10-18kg. Of that, roughly 6-12kg is refined lead, depending on the battery size. Despite common perception, today's EVs still require lead. EVs use a smaller 12V lead-acid battery because they don't have to crank an engine. Typically it will weigh 7-12kg and contain around 4-8kg of lead. This represents a reduction of 20-50% in refined lead demand for that sector.

If that was the only risk to refined lead demand, it would still be a headwind but not necessarily disastrous. However, EV manufacturers are moving away from lead-acid batteries. Newer EVs are now using 12V lithium-ion (LiFePO₄ or similar) auxiliary batteries instead of lead-acid. These batteries are lower weight, longer lifespan (often 8-15 years), faster charging, and importantly, contain no lead at all.

So every ICE car that is replaced by an EV lowers lead demand by 20-50%. And every EV that replaces the lead-acid battery with a different technology, lowers demand for that original 6-12kg refined lead to zero. For that vehicle, the demand is permanently lost.

Now it's not immediate doom and gloom for the lead industry. As the developed world continues to make the switch to EVs, there are large parts of the developing world such as Africa, India, Southeast Asia and parts of Latin America where ICE vehicle use will remain, potentially even increase, partially offsetting the decreased lead demand from EVs. However, as EV costs continue to come down, this will only offer a temporary respite for global refined lead demand.

The most likely path is European demand declining first, followed by North America, rapid transitions in China, and developing markets supporting lead-acid battery demand for another 20-30 years. Rather than a cliff edge, lead demand is more likely to experience a prolonged plateau before entering a gradual decline.

Unfortunately for lead, it is not just automotive batteries facing competition. Many of lead's remaining end uses are also seeing viable alternatives emerge.

Uninterruptible Power Supply (UPS) battery systems - essentially emergency backup power - are increasingly using lithium. Telecom is also moving toward lithium. Radiation shielding can use tungsten or concrete depending on the application, although lead remains the lowest-cost solution in many installations. Even ammunition could gradually reduce over the long term through regulation.

Even AI, which requires huge amounts of back-up power, originally relied on large banks of lead-acid batteries because they are proven, cheap, safe, and highly recyclable. But even here, lithium-ion systems are steadily gaining market share because they occupy less space, require less maintenance, and have longer service lives.

Lead produced from mined concentrate (primary lead) is a very interesting part of the equation. At first glance, there would appear to be enough production from secondary sources to meet demand. However, some applications of lead require a higher purity than you can achieve by recycling lead. Typically recycled lead contains 99.97% lead, whereas primary lead is normally 99.99%. If impurities like antimony, bismuth, tin, tellurium, copper, and arsenic cannot be reduced sufficiently through conventional battery recycling, then an interesting paradox develops.

As automotive batteries disappear, less lead is consumed overall, less scrap becomes available, and recycled production declines. The remaining demand becomes increasingly concentrated in applications that can't use recycled lead.

Lead concentrate (mined material) itself is unlikely to become the bottleneck since a lot of concentrate is mined from combined zinc-lead deposits. However, primary smelters require increasingly high amounts of capital investment to keep up with environmental regulations, particularly in a commodity facing increasing environmental scrutiny. It is difficult to envisage investment in new primary lead smelting capacity. Much more likely is a quicker push to substitution from more efficient or readily available materials. Or we could see a much smaller market that periodically experiences supply shortages because no one wants to invest in new capacity.

Lead is unlikely to disappear any time soon, there will still be applications where its density, reliability, and cost make it difficult to replace. But unlike copper, aluminium, or even zinc, it is becoming increasingly difficult to identify where future growth comes from.

The challenge for the lead industry over the coming decades will not be a collapse in demand overnight, but adapting to a world where long-term structural growth becomes increasingly difficult to find. The question for producers is no longer simply whether lead has a future, it is whether that future will be large enough to justify continued investment in new mining, smelting, and recycling capacity.

For only the second time in major tournament history, Germany lost a penalty shootout. The only other time this has happened was in the 1976 Euro finals. As an England fan I am unfortunately used to losing on penalties but for Germans it’s almost unheard of.

After last week's post on demurrage I received a few messages asking about detention. They often go hand in hand but they are not the same thing. In container shipping, demurrage refers to the time a container spends inside the terminal beyond the agreed free time.

Something newer operators and schedulers often confuse are the terms Laycan and Laytime. They sound similar but they refer to two very different parts of a shipping contract.

Imagine you've chartered a vessel to ship 20,000 tons of copper concentrate. The vessel arrives on schedule but loading can't commence because material is not ready, so loading is delayed by three days. The vessel can't leave, the owner can't earn money elsewhere, and every extra day costs thousands of dollars. This cost is known as demurrage.

Over the weekend I watched the movie ‘Pressure’. The film focuses on the meteorologists that were responsible for the decision over whether or not to launch the D-Day landings on the beaches of Normandy in World War 2.

Aside from being an excellent movie, one particular scene made me immediately think about commodity prices.

When most people think about vessels, they picture containers stacked 20 high on the deck of a ship. And that makes sense since most consumer goods are shipped in containers. But despite getting most of the attention, container ships carry only a small proportion of global seaborne cargo by weight. The majority of commodities are transported on either dry-bulk or liquid bulk vessels.