Global Times | February 22, 2012 22:45
By Michael Bellart |
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Domestic copper futures rose Wednesday on Tuesday night's rally in international commodities markets, but poor manufacturing data and weak domestic demand cut into gains.
The most active copper contract on the Shanghai Futures Exchange (SHFE), for May delivery, rose 0.7 percent from Tuesday's closing price to finish at 60,490 yuan ($9,606.04) per ton. The contract opened up 1.1 percent, in line with a 1.2 percent gain in London Metal Exchange (LME) copper futures over Tuesday night.
SHFE copper fell within the session's first hour and traded within a narrow range for the rest of the day.
The three-month LME copper contract was trading at $8,446.80 per ton when the SHFE closed Wednesday, down a fraction of a percentage point.
HSBC Holdings Plc and Markit Economics released their Flash PMI for the domestic manufacturing sector Wednesday, but the increase in the headline number to 49.7 in February, up from 48.8 in January, concealed weaknesses, according to a research note by Australian bank ANZ.
"Forward-looking subcomponents did not perform well," the note said. "New and export orders dipped. Purchases of intermediate goods, likely used in future production, remains below 50 and stocks of finished goods look to be on the rise."
PMI readings of below 50 indicate that the sector is in contraction.
In addition, the gap between SHFE and LME three-month copper futures expanded. The SHFE May copper contract was trading about $230 below the price on corresponding LME contract as of 3 pm Beijing time Wednesday. The gap indicates a dearth of domestic demand.
Copper on the Changjiang Nonferrous Metals Trading Market, a major spot metals market in China, traded at an average of 59,550 yuan per ton Wednesday, down 450 yuan from the previous trading day.
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