Shanghai copper was little changed on Wednesday, paring gains as London futures dropped almost 1 percent, but dealers said calm was returning to the anxious market after heavy losses at the start of the week. The June copper contract the most active on the Shanghai Futures Exchange, rose 130-yuan to 65,210 yuan a tonne. Prices touched 65,670 yuan.
On Tuesday, all three base metals traded on the Shanghai Futures Exchange dropped by their 4 percent daily limits. "The panic in financial markets is easing. These are good prices for consumers," a dealer in Shanghai said. "But I can't see a return to 70,000 yuan in the near term. The range should be 64,000 yuan to just above 66,000 yuan."
Spot copper prices in Shanghai edged up 100 yuan to between 65,850 and 66,100 yuan. Beijing increased banks' reserve requirement ratios by 0.5 percentage points, the first tightening step since last week's 11-year high inflation numbers.
But it was below market expectations and easier to bear than a hike in interest rates," dealers said. Copper for delivery in three months on the London Metal Exchange fell $70 to $8,140 a tonne. "The volatilty in the market doesn't give us much to work with. London sells and the US come in and buy, telling us there is nothing to worry about," Jonathan Barratt of Commodity Broking Services said.
"I think $8,000 is a big level. The market has rallied off that support but a close below that could signal that all is not well in world of physical demand." The Federal Reserve cut US interest rates by 75 basis points on Tuesday, slightly below market expectations. But the reduction cheered equity markets, which surged strongly.
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