China's copper futures contracts strengthened on Monday as shortages on the domestic spot market helped push up prices, traders said.
Shanghai's most active contract, January, gained 380 yuan to 27,280 yuan ($3,296) a tonne, while most other contracts on the exchange ended up between 120 yuan and 520 yuan.
Combined volume rose to 157,310 lots from moderate 137,672 lots on Friday. "Tight domestic spot supply helped Shanghai outperform the LME, but investors await a clearer trend from London," said a Chinese trader.
Spot copper in Shanghai jumped 230-280 yuan to move in a range of 29,600 to 29,730 yuan a tonne on Monday, giving futures prices a boost, traders said. LME three-month copper ended on Friday's kerb down $21 at $2,804 a tonne.
But during on Monday's Asian trade, it recovered to trade at $2,820/28. Shanghai aluminium contracts ended up 100 to 160 yuan on Monday in thin volume of 23,122 lots, little changed from Friday's 23,792.
The price ratio between Shanghai's January copper contract and the LME three-months stood at 9.65 at the close of the Shanghai market, up from 9.53 a day.
Traders say investors tend to buy LME copper when that ratio exceeds 10.3, which typically includes import and shipping fees.
If the ratio is lower than 10.3, that indicates LME prices that are higher than costs of importing the metal, up the reverse of that arbitrage opportunity.