Copper prices in Shanghai rose to the highest in four months on concern that demand may outpace supply during the peak construction period in the northern hemisphere spring. Zinc also gained.
Chinese imports of copper and copper products gained to 239,498 metric tons in January, 6.7 percent more than in December and the most since April, the Beijing-based customs office said. Global stockpiles of the metal monitored by the London Metal Exchange fell to a four-month low of 140,350 tons on Tuesday.
"It's really a continuation of the strong demand coming out of China," Colin Whitehead, an analyst at Fat Prophets in Sydney, said in a Bloomberg Television interview yesterday. "You've got inventory levels coming down, at the same time demand is still remaining strong, so that's really keeping prices up," he said.
Copper for May delivery on the Shanghai Futures Exchange, the most active contract, rose as much as 1,330 yuan(US$186.1), or two percent, to 67,500 yuan a ton, the highest since October 17. It ended the morning at 66,860 yuan a ton.
Metal for immediate delivery in Changjiang, Shanghai's biggest cash market, declined as much as 0.8 percent to 65,500 yuan a ton.
Copper on the London Metal Exchange for delivery in three months, which reached a four-month high yesterday, fell 0.7 percent to US$8,136.50 a ton at 12:21pm in Shanghai.
Copper futures for May delivery on the Comex division of the New York Mercantile Exchange declined 0.7 percent to US$3.7040 a pound at the same time.
Jiangxi Copper Co, China's second-largest producer of the metal, said most of its mine and smelter operations had been restored after disruptions caused by the country's worst snowstorms in decades. The smelter is running at about 85 percent of capacity, the company said.
Shares of Jiangxi Copper, based in eastern Guixi, Jiangxi Province, rose by the daily limit of 10 percent in Shanghai trading to 48.69 yuan.
Copper prices, which reached a record US$8,800 a ton in May 2006, have risen more than fivefold in the past five years on Chinese demand for the metal, used in wires and pipes.
"After shortages of equipment, infrastructure, labor, together with falling grades, strikes and windfall taxes, the critical problems facing mining companies today include growing global shortages of power and water," Morgan Stanley & Co analysts, including New York-based Hussein Allidina, wrote yesterday.
"Supply growth could remain constrained for the next 10 years, underpinning the base metals supercycle theme," Allidina said.
(Shanghai Daily February 21, 2008)
