Shanghai copper hit a five -month high on Monday on supply tightness as the market reopened following a public holiday last week. The cash to three months spread in London copper moved into backwardation last Friday, the first time in more than a year, standing at just $1.
"The backwardation, however small, shows that supply in the global market is expected to be tight through the year-end," said a Shanghai-based trader, adding that buying from China was not very active due to unfavourable price differentials.
The benchmark third-month copper futures contract on the Shanghai Futures Exchange hit a five-month high of $61,300 as the market opened, before ending at 60,600 yuan a tonne, up 1.3 percent from the previous close. The discount in Shanghai copper to LME copper shot up to 1,546 yuan, compared to 544 yuan on last Tuesday. Shanghai aluminium rose to 15,990 yuan a tonne earlier in the day, highest since early May, before easing to 15,930 yuan. Shanghai zinc reached 18,255 yuan a tonne, its loftiest level in nearly five months.
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