China Copper Futures Settle Lower On LME Losses

SHANGHAI--Copper futures traded on the Shanghai Futures Exchange settled sharply lower Wednesday following profit-taking in three-month LME copper overnight, but analysts said it's a proper technical correction and they still expect further gains in the short term.

The benchmark June 2007 contract settled CNY1,190 or 1.9% lower at CNY61,910 a metric ton, after trading between CNY61,580 and CNY62,330/ton.

Turnover for all Shanghai copper futures rose to 120,462 lots from 120,256 lots Tuesday. One lot is equivalent to five tons.

"Following strong gains in three-month LME copper last week, it's experiencing a consolidatory period before gaining further momentum to test higher," said Hu Bin, an analyst with Yong'an Futures Co.

"Given the steady decline in LME copper stocks, it still looks set to test $7,000/ton in the short term," Hu said.

Three-month copper on the London Metal Exchange fell $173 to end the late kerb Tuesday at $6,678/ton. It was quoted higher at $6,695/ton around 0700 GMT, when the Shanghai market was closed.

Meanwhile, spot copper continues to be traded at a discount to the front-month contract in China.

At the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, copper was quoted at CNY60,740-CNY60,940/ton, versus Tuesday's CNY62,620-CNY62,820/ton.

Zinc futures traded on the exchange settled lower in quiet trade after rising for two consecutive sessions, pressured by overnight losses in three-month LME zinc.

Turnover for all contracts shrank to 9,026 lots from 17,198 lots Tuesday.

Aluminum futures also settled lower after lackluster trade. Traders said more downside is expected, given weak technicals and lower domestic cash prices.

Aluminum was quoted at CNY19,230-CNY19,270/ton at the Changjiang market, versus CNY19,260-CNY19,300/ton Tuesday.

China's futures markets are off-limits to foreign investors.

Wednesday's closing prices in yuan a metric ton versus LME late kerb prices from Tuesday in dollars a metric ton:

 
            SHFE                   LME
Copper      Jun 61,910   Dn 1,190  3Mo $6,678   Dn $173
Aluminum    Jun 19,330   Dn  80    3Mo $2,747   Up $22
Zinc        Jul 29,535   Dn 150    3Mo $3,190   Dn $51