Nearby Shanghai copper futures rose on Wednesday while most others fell, as the prospect of tighter domestic supply led to steeper backwardation. Some copper originally destined for China has been diverted, after several weeks of soft demand kept domestic prices well below peaking international prices.
A large importer is expected to cancel copper imports contracted for September, traders said. That should help tighten spot supply, especially once factories resume full operations after a summer lull, they said. Shanghai's most-active November contract ended at 34,620 yuan ($4,274) a tonne on Wednesday, up a marginal 20-yuan from Tuesday's close, after an afternoon drop mostly wiped out gains.
October climbed 50 yuan to 35,020 yuan. Combined trading volume slid slightly on Wednesday to 80,140 lots from 82,902 on Tuesday. But traders were bullish about long-term price rises.
"Futures may hit some short-term technical resistance, but in the medium and long term we are optimistic," a trader in Shanghai said, cites short supply.
Spot copper in Shanghai jumped 435 yuan to 35,700-35,830 yuan a tonne on Wednesday on the prospect that supplies will tighten. But it is still 4 percent below the historic peak in May.
London Metal Exchange copper futures have hit several new highs since late July, on speculative fund buying fuelled by supply disruptions due to labour disputes.
Benchmark LME copper for delivery in three months was at $3,659.50 a tonne on Wednesday, up $32 from $3,627.50 at the same time on Tuesday. An historic high on Tuesday helped lift Shanghai futures on Wednesday.
Shanghai aluminium futures fell a little on Wednesday.