Shanghai copper edges up

Shanghai copper edged up on Tuesday after rising by its 4-percent limit in the previous session, but the market may ease due to haggardly physical prices. The most traded August copper ended at 63,910 yuan ($8,356), up 0.4 percent, or 260 yuan from Monday's close.
Shanghai copper futures rose by their 4-percent daily limit on Monday, following a surprise fall in inventories. Markets in London and New York were closed on Monday due to holidays. Shanghai futures could recover to 66,000 yuan in the near term, before falling to 60,000 yuan or even lower as China enters its seasonal slow period, said analyst Yang Jun at China Futures.
Copper for delivery in three months on the London Metal Exchange was at $7,310, up $110 from Friday's close. "There is a risk that demand may disappoint those investors who are looking at $7,500-a-tonne copper, If this is the case, a durable price above $7,000 is doubtful," said analyst Andrew Harrington of Australia and New Zealand Bank.
However, Harrington noted that the market would be watching developments in Chile, where workers at the world's largest copper producer, Codelco, are considering industrial action in support of a pay rise.
"The big thing is whether there will be a strike or other output disruption." Subcontract workers at the Chilean state-run company on Friday said they would go on strike on June 8 if the company did not improve working conditions and pay a bonus related to high copper price.
Shanghai August aluminium closed at 19,750 yuan, down 160 yuan from Monday. "China's production is huge, so it will be difficult to drive the aluminium price higher. I see prices fluctuating around the current level for the next few years," Lang. Daihen, vice director for aluminium at the China Non-ferrous Metals Industry Association, said on Monday.
China's aluminium output rose to 3.7 million tonnes in the first four months of the year, up 38 percent from a year. Lang. added that there is still room for Beijing to raise the export duty on primary aluminium to 30 percent from the current 15 percent, but the effect on the industry should be limited.
Three-month LME aluminium rose $3 at $2,795 a tonne. Shanghai July zinc fell 405 yuan to 30,245 yuan, giving up some of Monday's 4-percent rally, while London zinc was at $3,680 a tonne, up 3 percent, or $105, from its last close.
"The $3,600 level is a key support," said analyst Wang Zhouyi at China International Futures, adding that zinc might regain $4,000 level if that support holds. "Domestic traders are somewhat cautious, looking forward to the long-awaited tax move on high-grade zinc. London prices will definitely rise if China cuts tax rebates on high-grade zinc." Traders expect China to abolish a 5 percent export tax rebate on zinc of purity of 99.995 percent, known as Number 0 zinc in the domestic market. Export taxes on low-grade unwrought zinc will rise to 10 percent from 5 percent on June 1.