Shanghai copper futures slid on Tuesday on lacklustre demand for physical copper, as more traders expected a further slowing in demand growth in China, the world's largest metals consumer.
Trading on both the Shanghai Futures Exchange and the London Metal Exchange was light, with players reluctant to take on new exposure at the start of LME week, traders said. Shanghai's most-active copper contract, November, ended the session down 0.8 percent at 69,850 yuan ($8,837).
Some activity shifted to the December contract, as traders rolled positions forward. "September and October are the major seasons for copper purchases in China, but I have not yet witnessed any exciting trading volumes," said Jingo Zhengyu, trader at Zhejiang Hailing Group, a major copper pipe maker in China.
"I noticed that our smaller rivals now use more substitute materials, such as aluminium. Their products are selling well and more firms are joining them," he said.
China imported 34.5 percent less refined copper in August than in the same month a year. Its total import volume for the metal in the first eight months slumped 42.3 percent to 526,846 tonnes, while output in the same period was 1.9 million tonnes, up 23 percent.
The spot copper price in eastern China fell 865 yuan on Tuesday, trading in a range between 70,700 yuan and 71,070 yuan. On Tuesday, copper for delivery in three months at the LME fell 0.3 percent compared with Monday's close, to $7,430 a tonne. LME three-month aluminium was down 1 percent from Monday, to $2,585 a tonne. Shanghai aluminium futures fell, but traders said the strong spot trading of the metal could help support the price, as heavy exports keep domestic markets tight.
The most-active contract, December, dropped 0.7 percent to 19,830 yuan a tonne. "The premium for the metal is still relatively high in China. The spot price in Shanty Province was quoted at 22,200 yuan a tonne today, suggesting demand is hot," said Lu Zhiqiang, a trading manager at Wangle Dingxin Futures in Shanghai. Nickel for sale in three months was steady from its close at $29,450 a tonne in London on Monday, after it had touched a record high of $30,250 in trade.
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