Copper futures fell in Shanghai on the first trading day after a national holiday on signs Chinese buyers are holding back amid ample local supplies and high world prices.
Copper for immediate delivery in Changjiang, Shanghai's biggest cash market, has traded around 100 yuan lower than the near-month futures contract in recent weeks, a sign supply exceeds demand, Li Jingyuan, an analyst at Haitong Futures Co, said in a report yesterday. Copper jumped the most in more than two weeks in London on May 2 on supply disruptions in Chile.
"Not chasing the gain in London shows that Chinese buyers are rational at this price level," said Li. Users have ample stocks to sustain themselves before stepping up buying again, Li said.
Copper for July delivery fell as much as 960 yuan, or 1.5 percent, to 64,420 yuan on the Shanghai Futures Exchange and closed at 64,580 yuan. The market last traded on April 30 before closing for the two-day Labor Day holiday.
The London Metal Exchange was closed for a public holiday yesterday. Copper for delivery in three months rose from five-week low to close at $8,410 a ton on May 2.
Chile's state-run Codelco, the world's largest copper producer, said on Sunday it halted output at its El Teniente mine after a one-day restart as striking contract workers attacked buses carrying company employees.
Copper has risen 26 percent on the London Metal Exchange this year partly because weakness in the dollar spurred buying of commodities as a hedge against inflation.
The price difference between London and Shanghai "has risen to levels not seen since late 2006, indicating that Chinese traders have no interest in LME copper at $8,500 ton, pointing to a slowdown in imports at some point," John Reade, an analyst at UBS AG, said in a report on May 1.
China's March refined copper imports declined 7 percent to 126,421 tons, compared to the previous month, and may decline further in April, as record global prices deter buying and rising production adds to domestic supplies.
Shanghai zinc dropped 1.8 percent to 17,965 yuan a ton, and Shanghai aluminum fell 0.8 percent to 18,780 yuan a ton.
Refined zinc prices may climb by more than 50 percent in the next five years as growth in mine supply slows and leads to a global shortage of the metal used to galvanize steel, Macquarie Group Ltd said.
Source:China Daily/Agencies
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