Shanghai copper futures closed up slightly in sluggish trade on Tuesday as an upcoming spot copper auction by China's State Reserves Bureau sidelined many investors and offset the impact of firmer prices in London.
The SRB plans to hold a fourth copper auction on Wednesday, selling 20,000 tonnes in a market where it has already released 47,399 tonnes through auctions and over 40,000 tonnes through sales of futures. "The SRB auction depressed spot prices today and kept sentiment on the futures market very cautious," said a trader.
Cash copper prices in Shanghai fell an average of 200 yuan to 39,100-39,400 yuan ($4,840-$4,877) a tonne. On the futures market, the most-active February contract ended at 38,450 yuan a tonne, up 100 yuan from Monday's close. Combined trading volume for all contracts fell to just 42,802 lots from an already thin 50,564 lots on Monday. Benchmark copper futures on the London Metal Exchange were at $4,395 a tonne, up from $4,382 a tonne when the Shanghai markets closed on Monday.
Shanghai aluminium futures closed up solidly again on Tuesday on expectations that domestic smelters could trim output as a bargaining tool against alumnae suppliers ahead of term negotiations.
Higher LME aluminium prices and the large gap between copper and aluminium are also fuelling buying, traders said.
The most-active March contract ended at 18,600 yuan a tonne, up 210 yuan from Monday's close. Combined trading volume remained heavy at 42,122 lots, though that was down from Monday's exceptionally high 56,602 lots.
Benchmark LME aluminium futures were quoted at $2,219.50 a tonne, up sharply from $2,190.50 a tonne at the same time on Monday.
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