Shanghai copper prices rose 2 percent on Monday, supported by gains in London and reports of delays in shipping copper out of bonded warehouses. The April copper contract, the most active on the Shanghai Futures Exchange, rose 1,250 yuan to 61,150 yuan ($8,444) a tonne.
"I think the spot market will remain strong until March. Spot supplies are tight and we are hearing about delays in processing material imported from countries other than Chile," a dealer in Shanghai said.
Another trader estimated that around 50,000 tonnes of metal could have been held up. A manager at one large trading house in Shanghai said one of his clients had been unable to take more than 300 tonnes of copper a day from a bonded warehouse and the firm was moving all its copper from that warehouse to another one. However others said they had not experienced problems shipping in metal in the first week of the New Year.
Copper for delivery in three months on the London Metal Exchange rose $59 to $7,200, after gaining 2 percent on Friday. "Equity markets' performance has been awful recently and there has been some asset reallocation in favour of metals.
People are looking at commodities markets as a safer haven," ANZ analyst Mark Pervan said. "I think metals will be well supported in the next month or two.
There is a restocking phase coming through and we'll see some Chinese buying ahead of the Lunar New Year," he added. "That said, sentiment is still under pressure from weak US data and I expect a volatile market." Copper is up by more than 7 percent this year, versus a near 9-percent fall in the Dow Jones Industrial average.
But over the weekend analysts said copper would underperform versus aluminium in 2008 as demand growth for the former slowed to a "modest" level. Aluminium demand would be supported by booming real estate and automotive development in China, the world's fastest growing major economy, they said at a conference in Shanghai hosted by Maike Futures, one of China's largest copper importers. LME aluminium rose $4 to $2,454, while Shanghai's April contract was down 20 yuan at 18,380 yuan.