Sufficient supplies in the Chinese spot market will keep copper prices in China lower than those on the London Metal Exchange in the near term, keeping the arbitrage window closed, traders and analysts said on Tuesday. The Shanghai Futures Exchange third month contract rose to a 43-month high of 72,460 yuan ($10,979) a tonne on Tuesday.
But the price was still nearly 3,000 yuan lower than the LME price when adding a local 17 percent value-added tax, making buying from the LME and selling to Shanghai unattractive. Spot copper prices rose near 10 percent in the past month in China and stood at about 70,500 yuan on Tuesday. Copper stocks in warehouses monitored by the Shanghai exchange rose 9.5 percent to 131,891 tonnes as of December 31, from a week earlier, the highest since June.