Chinese copper futures contracts climbed moderately on Wednesday as a jump in prices on the domestic spot market overcame poor sentiment after a 2 percent fall on the London Metal Exchange, traders said. The most active January contract on the Shanghai Futures Exchange edged up 80 yuan to end at 29,100 yuan ($3,516) a tonne, rebounding somewhat from a 3 percent daily-limit fall on Tuesday.
Other contracts rose between 190 yuan and 680 yuan with volume jumping to a rare 274,544 lots, up from an already heavy 211,824 lots.
Spot copper in Shanghai jumped 550 yuan to move in a range of 31,770 to 32,200 yuan per tonne on Wednesday, recovering from a staggering 930-yuan plunge on Tuesday, traders said.
Spot prices have led copper movements over the past two months due to tight spot supply after below-average imports from May to August. Imports had risen since September, but had yet to replenish supply, traders said. "Gains in spot prices overwhelmed a steep fall on the LME overnight, helping Shanghai copper futures rebound by the close despite their weakening in early trade," said a Chinese trader.
Traders foresaw more volatility in coming days as investors wavered between tight spot supply and historically high prices.
LME three-month copper dived $60 to close Tuesday's kerb session at $2,944, as technical selling in Asian copper washed through to London, though it trimmed some losses to trade at $2,961/2,969 at 0403 GMT in Wednesday's Asian trade.
Most domestic aluminium contracts closed up between 30 and 190 yuan a tonne - in line with copper - as volume slipped to a puny 1,322 lots from an already thin 5,090 lots. The price ratio between Shanghai's March copper contract and the LME three-month widened slightly to 9.2 at the close of the Shanghai market at 0700 GMT.
Investors tend to buy LME copper when the ratio exceeds 10.3, which accounts also for import and shipping fees.