Shanghai, LME copper up

Shanghai copper jumped 1.6 percent on Monday, while London futures rose nearly 1 percent, lifted by a strike in Chile and a bullish technical performance on the London Metal Exchange in the previous session. The July copper contract, the most active on the Shanghai Futures Exchange, rose 1,010 yuan or 1.6 percent to 65,920 yuan ($9,405) a tonne.
Copper for delivery in three months on the London Metal Exchange added $65 or 0.8 percent to $8,640, trading less than 3 percent short of mid-April's record high of $8,880. "There are mixed conditions across commodities markets," National Australia Bank analyst Gerard Burg said. "Energy prices are really strong. Oil is around record highs, but gold is softer. Base metals are looking strong, and will tend to take cues from energy markets."
Metals prices wobbled on Friday, when a surge in the dollar ahead of this week's Federal Reserve meeting sent copper down to a three-week low of $8,370, before recovering at the close after crude oil gained as much as 5 percent. "Having seen lower level-testing fully reversed, sentiment will be bullish (this) week," brokerage Triland Metals said in a report.
Triland also noted that the premium for cash metal above the three-month contract increased. The spread was around $125 backwardation on Monday, having narrowed to around $90 last week. Dealers in Asia warned that a squeeze was developing on the London Metal Exchange for May, when Chinese markets are closed for a holiday.
"There may be a squeeze coming in London, but trading on the Shanghai market has not been very active lately, and I don't sense strong speculative atmosphere," said Pang Ying, an analyst at Shenzhen Rongtop Trading Co. The Shanghai exchange will close on Thursday, May 1 and reopen on Monday, May 5. Pang expected London prices to remain strong this week while China was out, but it was unlikely that London futures would reach record highs.
STRIKE SUPPORT: A strike by subcontractors at Chile's Codelco, the world's largest copper producer, entered its 13th day, putting a solid floor beneath the market and keeping up pressure on declining stockpiles. "The strike will underpin things. The goal in the short term seems to be to hit a new high and strike fears in the background make that more likely," NAB's Burg said.
The Andina and Salvador divisions remained shut, a Codelco source said over the weekend, but the Teniente underground mine reopened on Saturday. The strike is costing Codelco at least $10 million a day in lost output, which analysts said could total over 15,000 tonnes so far.
Copper inventories in Shanghai Futures Exchange fell 6,765 tonnes to 49,417 last week, while LME stocks declined 1,425 tonnes to 110,775 tonnes, enough for around two days of global consumption. The gap between London and Shanghai copper markets narrowed to 4,739 yuan from 5,206 yuan on Friday, including Chinese value-added tax.
The spread hit a record 6,549-yuan on April 18. London Metal Exchange tin was flat at $23,850, trading near on Thursday's record $24,600 as worries about supply from Indonesia and strong demand from China lifted the price outlook. London Metal Exchange aluminium was unchanged $2,995, but Shanghai metal gaineed 0.4 percent to 19,080 yuan Burg said gains in oil and coal prices were likely to support energy-intensive aluminium by adding to production costs.