BEIJING - Copper
futures woke up from their Golden Week holiday
slumber October 10 and jumped to record highs at
the Shanghai futures
exchange. The hike followed upswings in other
markets during China's week-long national holiday
break.
Copper was trading as high as
38,030 yuan (US$4,689) per ton on the 10th, with
the highest upward swing pegged at 1,400 yuan.
"This price is a record high. The highest ever,"
said Jiang Nianzu, a trader at Perfect Futures
Brokerage.
Traders said that major copper
users, including many telecommunications
manufacturers in China, are rushing to hedge
against further price hikes.
Because of high domestic demand for the metal, the
Shanghai exchange has gained greater influence in
setting prices in the global market.
China
uses up to a fifth of the world's copper supply,
with demand powered by a nation hungry for energy
and copper-based power lines. Copper imports grew
by 12% in the first eight months of this year. The
upward swing was also edged along by ongoing
strikes at large copper mines in Canada and the
United States, Chen said, lowering supplies around
the world. Prices for copper in both the London
and New York futures exchanges have gone up as
worldwide supply dwindles.
For the past
two months, the London futures market has been
ahead of Shanghai in terms of prices, said Jiang,
so Shanghai is likely to continue rising until it
reaches some sort of parity. "Prices will keep
going up before the end of this year because the
London market keeps going up," said Jiang. After
the holiday, prices surged yesterday morning, less
than an hour after the re-opening of the exchange.
"All prices went up by about 1,400 yuan
[per ton]," said Chen Yonglin, a trader at CITIC
Futures Brokerage Co. "The main reason was that
the market was closed last week. At the same time
the London market went up $120 last week." Chen
said prices are likely to remain high over the
next couple of months with little fluctuation as
demand from both the Chinese market and
international investors continues to be high.
Although demand for some base metals and
oil has declined marginally in China over the past
few months, copper prices continue to hit record
highs, the Economist magazine reported in its
latest issue. Futures markets allow for the
purchase of commodities at set prices, to be
delivered at a specified date.
