Thursday, October 12, 2006

Shanghai copper futures recovered slightly in light trading on Thursday, after low stocks helped support the rise in base metal prices in London on Wednesday.

Traders' focus shifted to low copper stocks in London and Shanghai warehouses, helping to support copper despite bearish expectations for Chinese refined copper demand growth this year.

Higher prices for nickel and lead also lent support to copper.

Shanghai's most active copper contract, December, ended up 0.7 percent at 69,820 yuan a tonne, boosted by slight gains in London on Wednesday.

Spot copper prices in eastern China traded between 70,950 and 71,270 yuan, up 135 yuan from Wednesday.

Copper for delivery in three months on the London Metal Exchange retreated 0.5 percent to $7,475 a tonne, after rising on Wednesday to close at $7,515 a tonne.

Customs data showed that China's purchases of the metal have receded in the first three quarters. Chinese imports of copper, including semi-finished products, fell 23.6 percent from a year earlier to 1.5 million tonnes in the first nine months of this year, data showed on Thursday

But China imported 528,953 tonnes of scrap copper in September, 30 percent higher than in August.

"Mounting international copper prices have encouraged Chinese fabricators to import more scrap copper for production," said an official at Jiangxi Copper, China's largest producer.

Part of the reason for the lower refined copper imports is that Chinese smelters, including Jiangxi, are expanding.

"We forecast that China's demand, especially for copper concentrate, will stay strong, as domestic smelters are expanding smelting capacity," the official said.

LME three-month aluminium was unchanged on Thursday at $2,600 a tonne.

Shanghai aluminium futures rose slightly, with the most active contract, December, ending up 1.1 percent at 20,150 yuan a tonne.

"Aluminium warehouses in Shanghai fell in recent months as traders continued to export the metal due to higher overseas prices. The low stocks may cause a price hike," said Cai Luoyi, an analyst at China International Futures Corp. in Shanghai.

Nickel was quoted at $30,115 after closing at $30,100 on Wednesday. Earlier this week, it hit a record high of $30,250.

Lead was quoted at $1,443 on Thursday, compared with $1,455 at the previous day's close. Traders said fresh fund buying had been triggered after news that China was aiming to limit production of lead to 4 million tonnes by 2010.

China will also move to limit refined zinc production at 5 million tonnes by 2010. Zinc added $15 to $3,800 a tonne on Thursday.

No comments: