Shanghai copper rose 2.6 percent on Wednesday, bouncing after the previous session's slide, but doubts about consumer demand in China and the health of the US economy remained worrisome for investors.
The February copper contract, the most active on the Shanghai Futures Exchange, rose 1,430 yuan or 2.6 percent to 57,500 yuan ($7,779) a tonne at Wednesday's close, following on Tuesday's 4 percent slide. "Shanghai copper is steady today after sliding in the last session, backed by high spot prices due to reduced imports in recent weeks and attempts to squeeze domestic supply," said analyst Cai Luoyi at China International Futures.
But he added that the tightness, seen by many as a play by suppliers to strengthen their bargaining position during annual contract talks with fabricators, would ease by year-end. A dealer in Shanghai said that despite the tight spot market, consumer demand was weak and that prices could continue to fall until March next year.
"The atmosphere is very nervous due to these lingering problems in subprime. Many investors are pulling money out of funds and high risk assets and metals are considered high risk," he added.
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