London metals futures gained sharply on Tuesday when trade restarted after a four-day weekend, while Shanghai copper futures jumped by their 5 percent daily limit. London Metal Exchange nickel and lead both hit record highs and zinc charged nearly 7 percent higher to $3,660.
"Zinc is up sharply in London. I think investors see the Shanghai contract as a new toy and are playing with it looking to make some money from arbitrage," an LME dealer said. "Copper is the star performer again after its limit up yesterday and today. But I am not sure all of this is associated with US data. There is a lack of liquidity and I think we should wait to see what happens when Europe opens."
Shanghai copper futures rose the 5 percent daily limit during on Tuesday's session to 72,400 yuan ($9,363) a tonne, after hitting a 4 percent daily cap on Monday.
At the close, the most active June contract was at 71,400 yuan a tonne, compared with its settlement price of 68,960 yuan on Monday. "Speculators were active in the market this but I think some traders have locked in their gains on the Shanghai copper and have taken their profits," said Yang Jun, an analyst at China Futures.
Spot copper in Shanghai was between 70,100 yuan and 70,500 yuan, up 1,600 yuan. China's imports of copper hit a record high of 307,740 tonnes in March as cargoes booked during a period of high premiums in the year continued to arrive, customs data showed.
Imports in the first three months of the year rose 58 percent from the year before to 776,576 tonnes. Benchmark LME copper hit a peak of $7,898.75 a tonne in the session in electronic dealing, it's highest since September 2006, up from $7,350 at the last open outcry on Thursday. But dealers said the peak could be a "stray quote" and possibly the result of a typographical error. Trades either side of the high was at $7,800 and $7,810.
"I'd say the real high today was around $7,810. The high falls within the Lime's 2 percent trade limit, but the parties may get together later and agree to cancel the transaction," another LME dealer said.
Copper was at $7,730, up 5.2 percent from Thursday. Analysts said positive US jobs data from last week was supporting confidence in the global economy, attracting fresh flows of money from investment funds. "Base metals are up across the board.
The strength in copper is related to the more positive news from the United States," Australia and New Zealand Bank analyst Andrew Harrington said. "The downbeat housing news has washed through and the market is more concentrated on the positive jobs and spending.
However, the threat posed by the collapse of the sub-prime mortgage market should not be discounted." Harrington added that there appeared to be a lot of institutional money coming into copper in particular. The most active July zinc contract in Shanghai hit 33,865 yuan ($4,381) a tonne, up 6 percent, compared with its settlement price of 31,950 yuan on Monday. The Shanghai Futures Exchange sets the daily limit for zinc futures at 4 percent, rising to 6 percent on the second day after they hit daily limits.
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