Chinese copper futures fell on Wednesday as a rising US dollar outweighed support from a firmer domestic spot market. The US Federal Reserve raised benchmark interest rates by 25 basis points on Tuesday. That pushed the dollar to a one-month high against the euro, making metals more expensive for buyers holding other currencies. Benchmark three-month copper price on the London Metals Exchange had fallen to $3,228 a tonne by 0711 GMT, down $24.5 a tonne from the same time the day before.
But in Shanghai, traders said continued support from spot prices somewhat offset weakness in futures contracts.
"The problem is the spot market. If the spot market doesn't go down, futures won't either," said a futures broker in Shanghai.
Physical copper was assessed at 33,950 to 34,150 yuan ($4,102 to $4,126) a tonne, up 75 yuan from Tuesday. Strong spot prices have kept copper futures in Shanghai in steep backwardation for several months. Most-active June copper closed at 31,380 yuan Wednesday, down 260 yuan from Tuesday's close. In contrast, front-month April was supported by strong spot prices and shed only 30 yuan, closing at 32,750 yuan.
Volume rose to 94,274 lots from 81,872 lots Tuesday, but remained relatively thin as high prices kept many investors on the sidelines.
Shanghai aluminium futures also lost ground Wednesday, in line with a $20.50 drop in the three-month LME aluminium contract, to $1,949.50 a tonne at 0711 GMT.
The most active June contract closed at 16,780 yuan, down 100 yuan from Tuesday's close. Combined volume was 13,776 lots, up from 11,720 lots Tuesday.
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