Shanghai copper rose nearly 1 percent on Friday, tracking a rally in London copper prices, with market sentiment buoyed by optimism about the US economic recovery and dollar weakness. Better-than-expected US data released on Thursday sparked optimism that the economic recovery was gaining hold, helping lift US and European stocks to more than one-year closing highs before the Christmas break.
New orders for long-lasting US manufactured goods, excluding transportation items, surged in November while new applications for jobless aid hit the lowest level in 15 months last week, pointing to a firmly entrenched economic recovery. The US dollar was steady against the euro on Friday, after falling for two days.
"The current rise in copper prices is mainly caused by inflation anticipation and speculation, while demand is quite subdued," said Zhou Jie, an analyst at Shanghai CIFCO Futures. "So long as the overall sentiment in the equity market is stable, investors will continue to buy in." Shanghai's benchmark third-month copper futures contract hit 57,720 yuan a tonne, the highest since early September 2008, before easing to end at 57,630 yuan, up 0.9 percent.
Shanghai copper posted a 3.8 percent weekly rise, the biggest weekly gain in three weeks. The most-active contract for April delivery rose 0.9 percent to 57,870 yuan. But some expected the market frenzy to fizzle out after the Christmas holidays. "I don't expect to see a further rally after Christmas. Spot prices aren't supportive - they are already at a big discount," said one Shanghai-based trader.
On the supply side, workers at Chile's massive Chiquicamata copper mine are likely to accept a final wage offer from owner Codelco and avert a strike at one of the world's largest mines, said union leaders. LME copper stocks rose 2,025 tonnes on Thursday to 484,800 tonnes, their highest in eight months. LME nickel stocks rose to record high of 152,400 tonnes.
The Shanghai Futures Exchange is scheduled to release its weekly warehouse stocks data after the market closes. Shanghai's copper stockpiles shot up 9 percent to 104,377 tonnes last week. Shanghai aluminium edged up 0.4 percent to close at a one-week high of 16,500 yuan a tonne. While Shanghai zinc hit a 21-month high of 19,905 yuan, before easing to end at 19,880 yuan.