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The most-traded February copper contract on the SHFE stood at 51,770 yuan ($7,820) per tonne as of 10:23am Shanghai time, up by 70 yuan from the previous session’s close.
The news that Tongling Nonferrous Metals Group, China’s second-largest copper producer, will close part of its operations to ease pollution over the winter has renewed market concerns regarding potential supply tightness.
“China’s second largest copper smelter began halting capacity last week at its main production hub in Tongling after the local government ordered curbs as part of national plans to ease pollution,” John Meyer at SP Angel said last week.
“Halted 20-30% of smelting capacity from annual total of 800,000 metric tonnes – no timetable for how long will last,” he added.
Further support for red metal prices came from the release of positive economic data out of China on Friday.
China’s trade surplus expanded to 263.6 billion yuan in November, which bested expectations for a surplus of 231 billion yuan. Yuan-denominated exports were up by 10.3% year on year compared with an expected 2% increase, while imports rose 15.6% in the same comparison, against a projected 12.5% gain.
“Copper imports were the standout, surging 42.4% from October to 470,000 tonnes in November (up by 23.7% year on year). The rise backs up our view that a tightening copper-concentrate market is pushing many buyers into the refined metal market to satisfy its copper units,” ANZ Research said on Monday.
Yet gains were muted amid rising concerns over a government-led deleveraging push in China which could tighten liquidity towards the year-end.
“The euphoria over the trade data may have been crimped by reports that Chinese authorities plan to effectively control leverage next year to prevent major risks,” ANZ Research added.
Meanwhile, softer Chinese inflation data released late on Friday has also exerted some downward pressure on the base metals complex this morning.
Chinese data released overnight on Friday showed the country’s consumer inflation slowed more than expected in November with a gain of 1.7%, compared with an expected increase of 1.8%. Meanwhile, Chinese producer prices rose 5.8% from a year earlier, compared with the previous month’s rise of 6.9%, according to data from the National Bureau of Statistics.
SHFE zinc, aluminium prices higher; rest weaker
Currency moves and data releases