The most-traded August copper contract on the Shanghai Futures Exchange rose 1.4 percent to close at 48,760 yuan a tonne on Friday. China's copper imports are likely to fall as an ongoing probe in Qingdao port into alleged fraudulent use of the metal as a collateral for loans has prompted banks to be stricter in lending to trading companies, analysts said.
Physical copper supply in China is tightening at a time when demand is brisk, boosting premiums for the metal in Shanghai.
Premium for physical copper in Shanghai surged to 580-730 ($93-120) yuan per tonne over the Shanghai front-month futures on Friday from a small discount last week, said Guo Hao, analyst at Jinrui Futures in Shenzhen, suggesting tight supplies.
"We think demand is one reason. It's very hot right now and sales of air-conditioning units are rising," said Guo. Hot temperatures typically lead to higher demand for copper tube that is used in air conditioners.
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