Shanghai copper futures finished sharply up on Monday after climbing to record highs for the third straight session, as the domestic market played catch-up with global prices.
Both international and domestic copper prices had hit repeated highs over the past eight weeks, due in part to massive short positions on the London Metal Exchange believed to be held by China's State Reserves Bureau (SRB).
But gains in domestic prices had lagged those of their global counterparts since mid-November, amid jitters that the SRB was trying to curb soaring prices through auctions of spot copper. But the bureau had ceased such sales since December 8.
"The domestic market began to outperform global markets late last week as investors believed the SRB would not take more action to push down copper prices," said a Shanghai trader. "Many also bet on a continued bull run on the LME after the holidays."
The LME is closed on Monday and Tuesday, but Chinese investors expect tight supply of spot copper globally to help the London market maintain its momentum in the near term. Shanghai's most active March contract ended at 41,680 yuan ($5,161) a tonne, surging 1,080 yuan from Friday's close, after hitting an all-time high of 41,880 yuan in intrude trading.
Trading volumes on all domestic copper contracts increased to 71,564 lots from 44,916 lots on Friday.
Spot prices in Shanghai also jumped on Monday, up an average of 1,050 yuan and moving between 41,800 and 42,250 yuan per tonne.
Shanghai aluminium futures also closed higher on Monday buoyed by heavy gains in domestic copper.
The most active March contract ended at 19,580 yuan a tonne, up 110 yuan from Friday's close. Trading volume rose to heavy 75,284 lots from 46,122 lots on Friday.
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