Most Shanghai copper futures contracts weakened on Monday as a build-up in local supply weighed on spot and futures prices. Data released after the Shanghai market closed on Friday showed a build of 4,999 tonnes of copper in warehouses monitored by the Shanghai Futures Exchange, to 39,386 tonnes.
Stocks now stand at twice their April low of 16,327 tonnes, but are still below a peak of 108,800 tonnes posted in March 2004. Spot copper prices fell to 34,520 to 34,650 yuan ($4,227 to $4,276) on Monday, down 265 yuan from Friday as increased availability pressured prices.
In another sign of spot weakness, the August-September backwardation was a mere 120 yuan, and the September-October backwardation 340 yuan, compared with inter-month spreads of about 1,000 yuan in the first half of the year.
The most-active futures contract, October, ended at 33,760 yuan a tonne on Monday, down 550 yuan from Friday's close, while futures from March onward rose.
Combined trading volume rose to 85,160 lots, up marginally from Friday's volume of 85,112 lots. "The Chinese market is playing from the short side and selling based on the thought that more material is going into the warehouses," an international trader based in Shanghai said, adding that Chinese traders were underestimating bullish buying by hedge funds.