Rising stocks slow copper futures surge

Shanghai copper futures rose for the second consecutive day yesterday, but lagged Wednesday's London Metal Exchange gains because of rising stocks in China.

The most actively traded Shanghai June copper contract rose 1.2 percent, or 770 yuan, to 66,140 yuan a ton.

"The LME rise was driven by fund investment and that pushed up prices in Shanghai," Wang Xiaodan, analyst at StarFutures Securities in Shenzhen, said.

She said falling stocks had supported LME prices and the upward trend was unlikely to turn around in the near term.

But a manager at a metal investment fund in China said he expected China's refined copper production to rise by 40,00-50,000 tons in March after snowstorms reduced output in February, and this would hold back Shanghai prices.

Copper stocks in warehouses monitored by the Shanghai Futures Exchange rose 4.7 percent, or 2,588 tons to 58,195 tons as of April 2, the exchange's weekly stock report showed yesterday.

But traders said some 6,000 tons of copper had been added at the exchange's warehouses but had not been included in the most recent data.

Aluminum inventories rose to 177,447 tons from 173,354 tons the week before.

Zinc inventories fell to 71,069 tons from 72,521 tons the previous week.

Copper rose on Wednesday as markets took some heart from positive private-sector job growth statistics and forecasts for improved US economic conditions in the second half of 2008 and 2009 from US Federal Reserve chairman Ben Bernanke.

Copper for LME three-month delivery ended up 2.6 percent at $8,515 a ton on Wednesday, its highest level on a closing basis since March 7.

US private employers unexpectedly added 8,000 jobs in March, according to a report by ADP Employer Services. Revised February figures shows a loss of 18,000 jobs.

But new orders at US factories fell for the second month in a row in February and by a much larger-than-expected 1.3 percent, a government report showed on Wednesday.

"The fundamentals are neutral at the moment. We do not see a single force that could persistently drive up or drive down international copper prices in the near term," the Shanghai metal investment fund manager said.

Shanghai aluminum futures were flat, with the most actively traded June contract down 0.2 percent to 19,290 yuan a ton yesterday.

Shanghai June zinc rose 1.8 percent to 19,420 yuan.

Agencies

(China Daily 04/04/2008 page15)