Copper futures traded on the Shanghai Futures Exchange settled sharply lower Friday in thinner trade, along with falling London Metal Exchange three-month copper during the session.
The benchmark March 2007 contract fell CNY1,210 to settle at CNY54,460 a metric ton, after trading between CNY53,930 and CNY55,300/ton.
Trading volume for all Shanghai copper futures fell to 70,362 lots from Thursday's 82,488 lots. One lot is equivalent to five tons.
"SHFE (copper) followed the cues given by the falling LME three-month during the day, amid concerns over how long the high cash premiums will remain," said Liu Shuguang, an analyst at Tiandi Futures Co.
Analysts said it's difficult at this point to say where LME three-month is heading. While the possibility of another round of sharp falls to $5,000/ton still exists, it can also breach psychological resistance at $6,000/ton after consolidating at $5,600-$6,000 for a few sessions.
"People are still standing on the sidelines, in the wake of the volatile prices in the past week," Liu said.
Cash prices rose Friday, despite the losses in futures.
On the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, copper was quoted at CNY57,450-CNY57,850/ton, up from Thursday's CNY56,700-CNY56,900/ton.
"This might be corrected soon, given increasing arrivals of imports," said an analyst in Shanghai.
"China did begin to import more since December, and the trend will probably continue," he said.
LME three-month copper rose $20 to end the late kerb Thursday at $5,899/ton. It was quoted lower at $5,805/ton at 0700 GMT, when the Shanghai market is closed.
Shanghai's aluminum futures settled slightly lower on the spillover effect of losses in copper.
The benchmark March 2007 contract settled CNY120 lower at CNY19,860/ton, after trading between CNY19,760 and CNY19,960/ton.
China's futures markets are off-limits to foreign investors.
Friday's closing prices in yuan a metric ton versus LME late kerb prices from Thursday in dollars a metric ton:
Copper Change Aluminum Change
Shanghai Mar 54,460 Dn1,210 Mar 19,860 Dn 120
LME 3Mo $5,899 Up $20 3Mo $2,735 Up $25
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