BASE METALS: Shanghai Metals Mostly Up; Weak Physical Buying Caps Copper

SHANGHAI (Dow Jones)--Base metals on the Shanghai Futures Exchange were mostly higher Monday, with copper rising for a fourth consecutive session in response to gains in global metal markets Friday.

Benchmark SHFE August copper settled 0.3% higher at CNY68,320 a metric ton, after hitting a more-than-three-week high of CNY68,730/ton at the opening.

The red metal benefited from across-the-board gains in base metals Friday on the back of pre-holiday book-squaring and the dollar's weakness against the euro.

"Without direction from the London Metal Exchange in Asian hours today [Monday], Chinese investors just tracked the performance before the weekend in overseas markets," said Minmetals Futures analyst Zhuo Guiqiu.

The dollar gained against the euro in subdued Asian trade Monday, but traders expected the greenback to weaken again this week amid signs of slower U.S. growth.

The euro was recently at $1.4281, down from $1.4320 in New York Friday.

However, the four-session rise in copper prices hurt physical buying and capped gains in futures contracts, traders said.

"Sales were pretty light today as end-users had stored some of the metal when prices were lower last week," said a physical trader in Shanghai.

Spot copper was trading at a premium of CNY450/ton against front-month SHFE contract, compared with a premium of CNY600/ton early last week, reflecting subdued buying interest.

Still, analysts said copper prices are going to be strongly underpinned in the medium- and long-term by demand from China, given its strategic interest in the red metal and the rapid growth of its economy.

Demand for copper in China's power industry is expected to rise 5% this year, while transport-industry use may rise 8%-10%, International Wrought Copper Council Secretary General Mark Loveitt said during an industry forum Sunday.

Copper traded at the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, was quoted at CNY69,300-CNY69,400/ton, up from CNY68,950-CNY69,050/ton Friday.

Three-month LME copper ended Friday's afternoon kerb $183 higher at $9,198/ton. The LME is closed Monday for a public holiday in the U.K. Trading will resume Tuesday.

SHFE zinc and lead inched down, while aluminum settled slightly higher.

Monday's settlement prices in yuan a ton and LME late kerb prices from Friday in dollars a ton:

 
            SHFE                     LME 
Copper      Aug  68,320  Up 230      3Mo  9,198     Up 183 
Aluminum    Aug  16,755  Up 30       3Mo  2,624.5   Up 62.5 
Zinc        Aug  17,295  Dn 40       3Mo  2,273     Up 15 
Lead        Sep  17,170  Dn 20       3Mo  2,505     Up 15 
 

Source: http://online.wsj.com/article/BT-CO-20110530-701473.html