shanghai copper limit up

http://africa.reuters.com/business/news/usnBAN922104.html

Shanghai copper limit up, LME hits 2-month peak
Wed 9 Jan 2008, 8:05 GMT

[-] Text [+] By Nick Trevethan

SINGAPORE (Reuters) - Shanghai copper futures jumped by their 4 percent daily limit on Wednesday, while London futures hit a two-month high, building on a 5 percent surge in the previous session, on strong demand from China.

The March copper contract the most active on the Shanghai Futures Exchange, opened 2,380 yuan higher from Tuesday's settlement, at 61,980 yuan a tonne, its upside daily limit, before retreating at 61,900 yuan at the close.

"China's copper demand is the momentum pushing prices up. The high premium in Shanghai's spot market mirrors tight physical supply and is driving up futures ahead of the Lunar New Year," said analyst Wang Zheng at Fubao Metals.

Spot copper prices in Shanghai were up 350 yuan, trading between 62,330 and 62,700 yuan.

Copper for delivery in three months on the London Metal Exchange gained $70 to $7,310, having rallied $340 in the previous session. Prices earlier touched $7,325, the highest since mid-November.

Copper has rallied 10 percent in the first week of 2008.

"Copper is flying. We are coming out of winter seeing good demand and there is no harm pinning prices back above $8,000." Jonathan Barratt of Commodity Broking Services in Australia said.

Fears of commodity price inflation are prompting investors to pour money into the sector, pushing gold to record highs, and expectations that emerging economic powerhouses such as China and India will continue to grow rapidly has so far offset dour economic data from the United States.

"There has been a pretty decent recovery in base metals, which is slightly surprising given that much of the economic news has been negative," National Australia Bank analyst Gerard Burg said.

"The gains are really associated with China and growth prospects there."

He said that stocks of metal in LME warehouses could start to decline, following steep increases in the second half of last year, as consumers gear up following year-end holidays.

"It is interesting to note that prices rose even as LME stocks grew more or less across the board, but I think some of this will be absorbed as consumption picks up again after the holidays," Burg said.

But he added that most metals markets were likely to be in surplus in 2008 and total stocks would swell again after the near-term dip.

LME stocks of copper fell 25 tonnes to 200,975 tonnes on Tuesday, but are around twice the level of July 2007.

Shanghai zinc was up 1 percent at 21,080 yuan but the benchmark LME forward contract was down $20 at $2,560.

Nickel eased $195 to $29,700 after rallying 6 percent on Tuesday.

Australia's Fox Resources Ltd said Chinese nickel refiner Jinchuan Group would purchase an 11 percent equity stake in the company.

Fox owns the Radio Hill copper-nickel mine, which is expected to produce 2,500 tonnes of nickel and around 20,000 tonnes of copper in 2008.