Copper prices bounced on Thursday, with Shanghai futures up more than 1 percent and zinc hit its upside limit as commodities extended the previous session's rebound, led by gains in oil. But the rally, based on short-covering and consumer bargain hunting, may not last as a firmer dollar and a worsening outlook for global economic growth will continue to pile pressure on industrial raw materials.
November Shanghai copper, the most active contract, rose 650 yuan or 1.2 percent to 57,300 yuan a tonne at 0230 GMT, chasing a 3.5 percent surge in London overnight as consumers picked up material and investors, who bet on falling prices, crystallised their paper profits.
The discount for third month Shanghai copper futures versus the benchmark London contract, including China's 17 percent VAT, widened to 1,831 yuan a tonne, from 716 yuan at the close of Shanghai trade on Wednesday, its narrowest since March. Dealers said prompt copper in Shanghai developed a small premium versus London cash prices during Wednesday's trade and might encourage more imports into China.
Shanghai zinc jumped by its 4 percent daily limit, to 14,175 yuan, in early trade, recoiling after the third-month contract hit a lifetime low of 13,445 yuan on Wednesday. Zinc later pared gains, trading at 13,940, while LME zinc rose $25 to $1,670. LME lead fell $4 to $1,680. Lead has been the big loser this week, shedding 22 percent since Friday, and is around its lowest in five weeks.
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