China Copper Futures Settle Up A Tad On LME Gains

SHANGHAI--Copper futures traded on the Shanghai Futures Exchange settled slightly higher Thursday, but analysts said they're likely to continue to be weaker than three-month London Metal Exchange copper in the last two trading days before the week-long Labor Day holiday.

Modest gains in three-month LME copper overnight helped drive prices higher in the session, but weak sentiment in the domestic spot market prevented SHFE copper futures from matching the gains in LME futures.

The benchmark July 2007 contract gained CNY210 to settle at CNY71,110 a metric ton, after trading between CNY70,730/ton and CNY71,500/ton.

Trading volume for all Shanghai copper futures fell to 91,838 lots from 115,790 lots Wednesday.

One lot is equivalent to five tons.

"Weak spot market weighed on futures, and (physical) traders said they expect the large cash discount to remain until the last trading day before the holiday," an analyst in Shanghai said.

"Trading volume was only a half or one-third of the normal trading volume," he added.

At the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, copper was quoted at CNY70,100-CNY70,300/ton, versus CNY69,740-CNY69,950/ton Wednesday.

Analysts said the recent gains in copper prices have kept end consumers on the sidelines, as they believe high prices may not last for long, as the global market is generally in surplus this year.

Even if fund buying likely to drive prices higher in early May, a possible dive in Chinese copper import data for April will affect the positive sentiment, analysts said.

In the short term, "three-month LME copper is due for a technical correction, with support around $7,700-$7,800," said Li Rong, an analyst with Great Wall Futures Co.

Three-month LME copper rose $60 to end the late kerb Wednesday at $7,860/ton.

It was quoted at $7,880/ton around 0700 GMT, when the Shanghai market closed.

Shanghai's zinc and aluminum futures settled a tad higher, in line with copper.

China's futures markets are off-limits to foreign investors.

Thursday's closing prices in yuan a metric ton versus LME late kerb prices from Wednesday in dollars a metric ton:

 
            SHFE                   LME
Copper      Jul 71,110   Up 210    3Mo $7,860   Up $60
Aluminum    Jul 20,110   Up 20     3Mo $2,822   Dn $17
Zinc        Jul 33,330   Up 185    3Mo $3,755   Up $20