SINGAPORE - Shanghai copper futures charged 3.3 percent higher on Wednesday as concerns grew about tight spot market supply and a major Chinese producer warned its warehouse stocks were very low.
"There is only a little refined copper in our warehouse. We are nearly empty now," Pan Qifang, a senior official at Jiangxi Copper, said.
Shanghai copper futures were sharply higher, with the most active March contract rising 1,730 yuan, or 3.3 percent, to 53,990 yuan a tonne by the midday break on Wednesday.
Jiangxi is China's largest copper producer, with an annual output of around 440,000 tonnes, most of which is sold on a long-term basis.
"Some of our mining facilities are under annual maintenance now, which I believe will impact production," Pan said.
He added that stocks were down to around 1,000 tonnes, and while the company was meeting its long-term obligations, it was unable to supply to the spot market.
A spot trader said: "Supply is short in Shanghai these days, especially for Chilean copper."
Spot copper prices in Shanghai were up 1,025 yuan, quoted between 56,650 yuan and 57,000 yuan.
"Import increases cannot meet demand in the domestic cash market as several Chinese smelters are being overhauled," Shen Haihua, an analyst at Maike Futures, said.
Copper for delivery in three months on the London Metal Exchange were $70 higher at $5,730 a tonne at 0528 GMT.
"There is some buying coming in from consumers in this part of the world and there is also a bit of covering from broker shorts," an LME dealer in Hong Kong said.
"There is strength across the board and copper looks like it could change tack and shake off the weakness seen from the start of the year."
The most traded April Shanghai aluminium futures contract rose to 19,610 yuan from 19,450 yuan. LME aluminium gained $5 to $2,820.
"Aluminium is the interesting story. Basically the price only needs to rise another $100 from here and gravity could propel the market to those call strikes at $3,100," Sempra Metals economist John Kemp said.
"The last time we got to these levels there was quite a lot of selling, which seems to be absent this time."
Traders speculated that the holder of a large quantity of physical aluminium had also established significant call options -- the right to buy futures at a particular price -- in the hope of igniting a rally and pushing prices back above $3,100 a tonne.
"We are getting closer to options declaration and the granters of all those calls will be getting more sensitive to price moves," the dealer in Hong Kong said.
The play has squeezed the aluminium market. Premiums for LME cash metal were around $115 above the three-month price, close to their highest since 1990, and up from $30 at the start of 2007.
Nickel for delivery in three months on the LME was at $37,700 a tonne, down $50 from London's last indicated price on Tuesday, when the metal set a record high of $38,300.
Tin was unchanged at $12,100. During Tuesday's third rings, tin hit a record $12,225.
Both metals are surging on a combination of threats to supply, strong demand and limited stocks in LME warehouses.
Available stocks of nickel in LME warehouses stand at 3,768 tonnes, under one day's global consumption and down from around 36,000 tonnes at the start of 2006. In the same period, prices
have jumped 170 percent.
Tin stocks are running at 12,380 tonnes, down from 16,725 tonnes at the start of 2006. Uncertainty about the operation of independent smelters in Indonesia and a switch to tin-based
solders from l
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