In a sharp reversal, copper futures contracts trading on the Shanghai Futures Exchange (SHFE) yesterday rebounded to the highest allowable daily price at the opening, and remained there for the rest of the day.

The most actively traded copper contract for delivery in August rose 1,860 yuan, or 2.9 percent, from Friday to close at 63,650 yuan per ton. The Shanghai Nonferrous Metals Price Index, the daily composite spot price index for nonferrous metals, made its formal debut yesterday at 3,110.38 point, up 79.22 points, or 2.5 percent from the pre-release level Friday.

Aluminum and zinc contracts on SHFE also closed at higher prices from the previous close.

According to analysts, the rebound of copper futures picked up from the price surge on the London Mercantile Exchange, LME, last Friday after the market closed in Shanghai.

The price of copper on the LME soared to $7,200, an increase of $200, or 2.9 percent, after the price fell to an eight-week low of $6,952 per ton. LME was closed for trading on Monday, which was a public holiday in United Kingdom.

The latest copper price increase is widely seen as a short-term adjustment. Cai Luoyi, an analyst with China International Futures Co Ltd, said: "The market is going to continue with the price fluctuations. The copper price is expected to fluctuate within a band of $7,000 to $7,500 per ton," he added.

Despite the lowest copper inventory on LME since last November, traders in China are mostly concerned about the large stocks of the metal, the result of increased copper imports in previous months.

Cai said he didn't expect any sustained recovery in copper prices in China before a significant run down in the stockpile.

According to statistics from General Administration of Customs released on Friday, China's import of copper concentrates for the first four months amounted to 669,697 tons. In April alone, China's imports of copper concentrates increased 48 percent to 483,382 tons from a year earlier.

"Before this October, the market demand for non-ferrous metals is in the off season," said Li Jingyuan, an analyst with Hai Fu Futures Co Ltd. For that reason, "the price trend of copper therefore is not expected to climb very high," he said.

(China Daily May 29, 2007)