Commodities prices on China's futures exchanges rose on the back of an international rally that was primarily technical in nature, analysts said.
The most active copper contract on the Shanghai Futures Exchange (SHFE), for August delivery, jumped 1 percent Thursday to settle at 66,810 yuan ($10,287) per ton at the close of trading.
The contract, which serves as a bellwether for other industrial metals, opened 0.3 percent higher, following a similar early rise in copper prices on the London Metal Exchange (LME). The three-month LME copper contract was up 0.6 percent when the SHFE closed this afternoon, standing at $8,925 per ton.
Some analysts saw the rise as a technical response to the 3 percent drop in LME copper on Monday, meaning that traders are willing to buy for the short-term, betting correctly that the price would naturally rebound from such a large drop.
However, analyst Zhang Xi of Luzheng Futures pointed out that the upside for a technical recovery for copper and other base metals is limited right now.
Zhang said he was concerned about the large stockpile of copper that continues to sit in China's bonded warehouses; the strong likelihood that the government will continue to tighten monetary policy, squeezing domestic demand; and the difficulty for non-State-run firms to secure credit.
SHFE base metals all went up Thursday. The most active zinc contract, for August delivery, shot up 1.9 percent to settle at 16,980 yuan per ton. The September lead contract increased by 1.9 percent to 16,915 yuan per ton, while the August aluminum contract floated 0.4 percent higher to 16,655 yuan per ton.
SHFE gold continued to rise on lingering macroeconomic concerns around the globe. The most active contract, for December delivery, tacked on 0.2 percent to settle at 317.39 yuan per gram. The Comex June gold contract continued to rise after Chinese markets closed Tuesday, settling at $1,523.30 per troy ounce, or $48.97 per gram. The contract had risen another 0.2 percent as of 6 pm Beijing Time Thursday.
Agricultural commodities rose almost across the board. The most active sugar contract on the Zhengzhou Commodity Exchange gained 1 percent to settle at 6,554 yuan per ton at the close of trading. SHFE natural rubber got a bounce, with the most traded contract up 1.7 percent to settle at 31,410 yuan per ton.
