Shanghai copper futures rose more than half a percent on Wednesday and were expected to extend gains on rising physical demand in China, while a holiday in London capped demand.
The March copper contract, the most active on the Shanghai Futures Exchange, was up 0.57 percent, or 330 yuan at 58,300 yuan ($7,950) a tonne by the noon close, after a slight decline in the last session following a drop in Shanghai's spot market.
Analysts said they expected copper prices in Shanghai and London would be boosted by rising demand in China, as Chinese fabricators needed to build up their copper inventories ahead of the Lunar New Year, which falls in February.
"Copper prices in Shanghai are forecast to reach 64,000 yuan, while metal prices in London to $7,400 in the middle of January," said analyst Yang Jun at China Futures.
The London Metal Exchange will resume trading on Thursday, December 27. However, spot copper prices in Shanghai fell as high prices have dampened buying interest, putting pressure on the futures market. Spot copper prices in Shanghai were down 850 yuan on Wednesday, trading between 60,000 yuan and 60,200 yuan. The spot premium continued falling, to around 500-yuan, compared with 2,000 yuan last on Thursday.
"The spot premium has fallen to a level that reflects a reasonable supply and demand situation on the spot market," said analyst Jane Jiang at Shanghai Non-ferrous Metals Industry Association. Spot copper premiums in China were buoyed after two Chinese major copper smelcopper production by a to major repairs.
China's monthly copper consumption is estimated at around 350,000 tonnes. Shanghai's March zinc contract rose nearly 1 percent to 19,155 yuan, while the most-traded March aluminium contract was up 10 yuan at 18,260 yuan after falling 2 percent on Tuesday.