Shanghai nonferrous metals yesterday rose sharply, with copper and zinc futures jumping to the daily allowable limits, largely triggered by falling inventory and rising expectations of robust demand in 2008.
All the 11 copper futures contracts on Shanghai Futures Exchange, SHFE, soared to their daily allowable limits. The most actively traded copper futures contract for delivery in March surged 4.99 percent, continuing the fourth day of price rise since last Wednesday, to close at 58,460 yuan per ton.
Prices of all 11 zinc futures contracts on SHFE also jumped to their daily allowable limits, with the most actively traded contract rising 3.98 percent to close at 19,075 yuan per ton.
Copper inventory level on SHFE has dropped 66.7 percent from August. Analysts said the sharp drop is because most metal enterprises are stockpiling to prepare for next year's production run.
"As 2008 approaches, many domestic metal processors and manufacturers have gone on a buying spree to build up inventories to meet expected production demand," said Li Jingyuan, analyst at Haitong Futures Co.
Analysts said the rising spot prices of non-ferrous metals have also prompted traders to buy futures in expectation of an eventual narrowing of the price spreads.
In the domestic market, spot price of electrolytic copper yesterday rose to as high as 63,000 yuan per ton, up 10.5 percent over the past week.
Analysts said non-ferrous metals prices in the domestic market were pushed up by last Friday's price surge in the international market amid the rising optimism on the US economic outlook and the growing demand for non-ferrous metals globally.
Last Friday, the three-month copper futures contracts on London Metal Exchange (LME) rose 4.35 percent, the biggest one-day increase in the past month, to $6,840 per ton, while the three-month zinc futures contracts also climbed 4.09 percent to $2,415 per ton.
Economists and analysts said latest figures about US consumer spending indicated the US economy is unlikely to slacken.
According to figures released by the US Department of Commerce on Friday, US consumer spending in November rose 1.1 percent from October, the biggest monthly increase since July 2005, largely surpassing the previous forecasts.
(China Daily December 25, 2007)
