Shanghai copper closed mixed on Friday, with prices of nearby contracts trading higher due to a squeeze in spot supply a trend that the market expects to persist in the short run, traders said.
The most active October contract fell by 160 yuan to 23,730 yuan ($2,866), while most other contracts closed by between 160 yuan higher and 140 yuan lower. Combined volume dropped to 195,860 lots from Thursday's 296,518 lots.
The Shanghai market slipped into backwardation whereby prices of nearby contracts are higher than distant futures in late April. "The trend became even more obvious after the week-long May Day break.
Spot supply is still pretty tight, so this might continue in the next few sessions," said a trader in Shanghai. The market was closed from May 1 to 7 for the break. Metal markets are now watching for signs of a possible interest rate hike in China and will be looking at US data yet to be released, traders said.
In Asian trade on Friday, LME copper trading at $2,575/$2,585 a tonne, after losing $34 to $2,581 a tonne on Thursday, despite a brief lift from news of force majeure at Canada's Falconbridge Ltd's Kiddie Creek facility, traders said.
Spot copper in Shanghai rose by 50 yuan and 80 yuan to move in a range of between 24,900 yuan and 25,100 yuan. Shanghai aluminium was mostly lower, with most contracts losing by between 10 yuan and 100 yuan.
Volume dwindled to 76,584 lots from Thursday's 128,480 lots. LME aluminium traded at $1,596/$1,601 a tonne on Friday's Asian trade, steady from Thursday's kerb close of $1,592.
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