Copper futures market almost paralyzed
english.people.com.cn
SHANGHAI: Although most commodity traders thought the recent slump in copper prices was only short-term, they were still surprised at a sudden and fierce rebound this week.
On Tuesday, copper futures prices in London shot up 11 per cent to US$8,460 per ton as international traders and speculators rushed to cover their short positions. It is thought the surge was the reason why the Shanghai copper futures market was virtually paralyzed.
When the city's futures exchange began trading yesterday, the opening price for copper futures contracts hit the price rise ceiling of 4 per cent allowed under the exchange's rules and stayed there throughout the entire session.
Copper for delivery in August opened at 73,850 yuan (US$9,230) a ton yesterday, up 3,200 yuan (US$400) from Tuesday's close.
As a result, trading almost stopped. Only 190 tons of the metal were contracted for delivery in three months compared to an average turnover in excess of 265,000 tons in recent months.
Traders on the Shanghai exchange, which has become the second largest market in the world for copper futures, said they expected prices to hit the ceiling again at opening today.
The rebound ended a short-term slump that had taken place in global markets over recent weeks.
Commodity traders attributed the surge of copper future prices to the price rebound of the metal at the London Metal Exchange.
"The rebound in China is basically caused by the change on the London market, which we are closely linked to," Wu Bowen, an analyst with Shanghai-based Jin Peng Futures, said.
"But the burgeoning Chinese economy has driven a roaring foreign commodities market, which in turn drags up commodity prices in our country too," he added.
Other reasons include rising fuel prices in China and an excessive correction of commodities after their prices soared to record highs earlier this month.
China increased the prices of petroleum, diesel and aviation fuel by about 10 per cent, the largest increases since 2003.
An official with the State Development and Reform Commission said on Tuesday night it had increased fuel prices because China's current prices are far below those in the international arena. This, the official said, has reduced the profits of Chinese oil refineries.
Analysts warned the fall in copper prices was just short-term and wouldn't alter the rising price trend, caused, they said, by surging demand from China's commercial sector and buying by speculators.
Yang Fan, a trader at the Shanghai-headquartered Dalu Futures, forecast that futures would continue to open at higher rates today.
The surge also set price trends for other commodities such as rubber and aluminium; their price increases reached ceilings set by the exchange as well.
Source: China Daily |
