Spread Reopens -Barcap ( )
BEIJING, Jul 20, 2009 (Dow Jones Commodities News via Comtex) -- Supply tightness has returned to the Chinese copper market as the spread between the Shanghai Futures Exchange and London Metal Exchange reopens, Barclays Capital said in a research note Tuesday.
"The simple fact is that there is not a lot of freely available refined copper around," Barcap said. "Neither is there much scrap."
Adding to the relatively low supply, Chinese customs officials are thoroughly inspecting scrap imports to ensure import duties on copper content in scrap are fully paid, Barclays said.
Shanghai's benchmark November copper contract opened at CNY43,210 ($6,327) a metric ton Tuesday; London's three-month copper contract was at $5,410/ton at that time.
This supply picture has persisted throughout much of 2009, but recent signs add a strong uptrend, according to Barclays analysts, led by Gayle Berry.
"We had been expecting a slowdown in China's base metals imports, but incoming data suggest that the magnitude of that slowdown could be less than previously thought," Barcap said. "Anecdotal reports suggest some strengthening in Chinese demand...With real demand expected to improve further through the second half, it looks as though the fall in imports may be modest."
Demand from developed countries now appears likely to further support prices, it said.
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