Shanghai copper tracks London higher

13 Dec, 2006

Shanghai copper futures rose on Tuesday and London copper edged higher in light trade ahead of a US interest rate decision. Chinese copper futures prices were higher, with the most active February contract up 0.74 percent, or 470 yuan, at 64,170 yuan ($8,197) per tonne.
"Shanghai copper is rising in line with the gains in London. But the market is quiet and will be quieter still nearing Christmas," said Pang Ying, a senior analyst at Minmetals Star Futures in Shenzhen.
"There should not be any great changes in fundamentals through to year-end, unless a huge volume of copper is delivered into China to relieve supply concerns," Pang said.
The US Federal Reserve is widely expected to leave rates unchanged at 5.25 percent at a policy meeting later in the day, but investors will scrutinise the post-meeting statement to see how concerned the central bank is about inflation risks.
"The market is stuck in its ranges. People are debating what will be the next direction. There is an FOMC meeting in the United States that could be a turning point," a dealer in Tokyo said.
"My own opinion is that the market will probably turn slightly lower." The euro gained to $1.3265 from around $1.3235 in late US trade. The dollar slipped to 116.71 yen from 117.00 yen. A weaker greenback makes dollar-denominated commodities cheaper for holders of other currencies.
Copper for delivery in three months on the LME rose $10 to $6,940 a tonne from the close in London on Monday. Cash copper in eastern China rose 460 yuan to trade between 65,700 yuan and 66,000 yuan. LME aluminium was flat at $2,795. The most active February Shanghai aluminium futures contract fell 20 yuan to 20,250 yuan a tonne.
LME zinc ticked down $10 to $4,340. Australia's Zinifex Ltd and Belgian metals firm Umicore will combine their zinc smelting and alloying businesses to create the world's largest zinc metal producer. The news sent Zinifex shares up 7 percent. "The zinc market is very hot right now and it's a good time to sell zinc smelters," Daiwa senior analyst Mark Proven said. Zinc prices have rallied around 130 percent this year to hit a record high of $4,580 in November.

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