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Copper futures woke up from their holiday slumber Monday and jumped up to record highs at the Shanghai futures exchange.
The hike followed upswings in other markets during China's week-long national holiday break.
Copper was trading as high as 38,030 yuan (US$4,689) per ton Monday, with the highest upward swing pegged at 1,400 yuan (US$172).
"This price is a record high. The highest ever," said Jiang Nianzu, a trader at Perfect Futures Brokerage.
Traders said that major copper users, including many telecommunications manufacturers in China, are rushing to hedge against further price hikes. Because of high domestic demand for the metal, the Shanghai exchange has gained greater influence in setting prices in the global market.
China uses up to a fifth of the world's copper supply, with demand powered by a nation hunger for power and copper-based power lines. Copper imports grew by 12 percent in the first eight months of this year.
The upward swing was also edged along by ongoing strikes at large copper mines in Canada and the United States, Chen said, lowering supplies around the world. Prices for copper in both London and New York futures exchanges have gone up as worldwide supply dwindles.
For the past two months, the London futures market has been ahead of Shanghai in terms of prices, said Jiang, so Shanghai is likely to continue rising until it reaches some sort of parity.
"Prices will keep going up before the end of this year because the London market keeps going up," said Jiang.
After the holiday, prices surged yesterday morning, less than an hour after the re-opening of the exchange.
"All prices went up by about 1,400 yuan (per ton)," said Chen Yonglin, a trader at CITIC Futures Brokerage Co. "The main reason was that the market was closed last week. At the same time the London market went up US$120 last week."
Chen said prices are likely to remain high over the next couple of months with little fluctuation as demand from both the Chinese market and international investors continues to be high.
Although demand for some base metals and oil has declined marginally in China over the past few months, copper prices continue to hit record highs, the Economist magazine reported in its latest issue.
Futures markets allow for the purchase of commodities at set prices, to be delivered at a specified date.
(China Daily October 11, 2005)
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