Shanghai copper rose by its 5 percent daily limit yesterday, chasing sharp gains in London fanned by Fed chief Ben Bernanke's comments on economic recovery.
London Metal Exchange copper for delivery in three months rose almost seven percent since Shanghai closed on Friday, lifted by Bernanke, who gave his clearest signal yet that a recovery is at hand, while the biggest rise in sales of previously owned US homes in July in nearly two years added to the bullish sentiment.
"Copper is a vampire metal - some weak data puts a stake through its heart, but a sniff of a positive number and it's back flapping its wings," a dealer in Singapore said.
"I doubt anyone in the market thinks this price is a reflection of the state of demand and supply, and from the volatility it's fairly obvious the market is being played by speculators. We need to see whether their money is here for the long haul or just short-term punting."
Benchmark third month Shanghai copper rose 2,340 yuan (US$342.55) from Friday's settlement to 49,330 yuan, and zinc also hit its threshold at 15,530 yuan before retreating to 15,460 yuan at the close.
Copper for three-month delivery on the LME jumped 1.9 percent to US$6,386 in early trading, having closed up 3.7 percent on Friday. Copper earlier hit US$6,410, its highest in just over a week.
In the past 10 days the market has traded in a near-US$700 range, driven up on hopes of economic recovery, then down after weak consumer sentiment data, then back up as the numbers turned more positive again.
"While we see this inconsistency in the macro economic news, prices are going to remain very volatile and I think this will last for a couple more months at least," the dealer said.
The latest steer came from China, where refined copper imports fell 23 percent to 292,226 tons in July from June's 378,943 tons, ending five months of record inflows, data from the General Administration of Customs showed.
Despite the fall, imports in the first seven months of the year were up almost 170 percent from the same period last year, at 2.07 million tons.
"Merchants, end-users and speculators reduced spot imports as that had no margins," Zhu Yanzhong, analyst at Jinrui Futures, said. Analysts and traders had expected July's imports to fall by between 10 and 30 percent.
Shanghai copper has tended to trade at a discount to London since early June. Yesterday, the benchmark contract in the eastern Chinese city was 1,700 yuan less than its LME equivalent, taking into account China's 17 percent Value Added Tax.
Lead prices rose 3 percent to US$1,920 after Henan, China's top refined lead producing province, said it had shut down up to 240,000 tons of annual lead smelting capacity in recent days following lead poisoning reported to have affected hundreds of children in Shaanxi province.
Aluminum rose by US$24.50 to US$1,954.50, while nickel, which came a little late to the party on Friday, lagging copper's rise with a gain of 2.3 percent, surged as much as US$749 or 3.9 percent to top out at US$20,049. In early trading, prices ticked back to US$19,900.
(China Daily August 25, 2009)
