Shanghai copper softens

23 Apr, 2004

Most Shanghai copper and aluminium fell by the three-percent daily limit shortly after the on Thursday, following sharp falls in the London Metal Exchange (LME) overnight.
The most active October copper contract was down 1,010 yuan to 25,380 yuan ($3,067), while the most active October aluminium contract shed 600 yuan to 18,040 yuan a tonne.
"Steep falls on both the domestic and global markets over the past few weeks have greatly weakened sentiment in Shanghai, so we expect further falls in the near term," said a Shanghai trader.
Overnight in London, fears of higher US interest rates eclipsed optimism about economic growth in industrial and precious metals markets, draining the life from rallies that had driven prices to multi-year highs.
Weak LME performance hit Shanghai already on Wednesday when key copper and aluminium contracts ended limit-down. Chinese metals futures had already been weighed down by credit tightening as Beijing tries to avoid overheating the economy.
Three-month copper was quoted at $2,685/$2,695 after shedding $170 to $2,715 by the close on Wednesday. Aluminium stood at $1,714/$1,724 compared with $1,720 at the close, down $117 from the day before.
China has tried to combat over-investment by raising bank reserve ratios three times in less than seven months, forcing banks to keep more cash on hand instead of lending it out, after economy grew 9.7 pct in the first quarter.

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