WSJ:BASE METALS: Shanghai Metals Rise On Equities; Bargain Hunting
SHANGHAI (Dow Jones)--Base metals on the Shanghai Futures Exchange rose Wednesday as investors took advantage of low prices to make bargain purchases.
The rebound after the market's recent decline was in line with Chinese equity markets as investors welcomed a commentary piece in a leading newspaper that heightened expectations that China's central bank may consider lowering banks' reserve requirements.
Benchmark November copper settled 1% higher at CNY67,450 a metric ton.
Buying on dips helped keep SHFE metals stay firmly in positive territory, while spillover positive sentiment from the stock market also improved confidence, analysts said.
A commentary piece on the front page of the China Securities Journal quoted analysts as saying that the People's Bank of China might lower reserve requirements for some or all banks, soon after it tightened liquidity by expanding the ratio to include margin deposits.
"Metals were basically tracking equities, just like what they've been doing recently, so it made sense to see some technical rebound today," Shanghai Cifco Futures analyst Wang Zhouyi said.
SHFE metals also benefited from a stronger euro against the dollar in Asian trading, which boosted buying for dollar-denominated metals on the London Metal Exchange as they became cheaper for other currency holders. Although SHFE metals are priced in yuan, they tend to track LME counterparts.
At 0700 GMT, the euro was at $1.4077, compared with $1.3997 late Tuesday in New York.
Analysts said metals' near-term price movement may continue to track developments out of the U.S. and euro-zone economies, with fundamental news taking a backseat for now.
Copper traded at the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, was quoted at CNY67,350-CNY67,400/ton, up from CNY67,100-CNY67,100/ton Tuesday.
Three-month London Metal Exchange copper ended Monday's afternoon kerb $26 lower at $8,933/ton.
It was quoted 1.1% higher at $9,032/ton around 0700 GMT, when the SHFE closed.
SHFE aluminum settled 0.6% higher, zinc settled 1.2% higher and lead added 0.8%.
Wednesday's settlement prices in yuan a ton and LME late kerb prices from Tuesday in dollars a ton:
Metal SHFE LME
Copper Nov 67,450 Up 670 3Mo 8,933 Down 26.0
Aluminum Nov 17,375 Up 100 3Mo 2,384 Down 3.0
Zinc Nov 17,020 Up 195 3Mo 2,187 Up 15.0
Lead Oct 16,570 Up 135 3Mo 2,384 Down 46.0
-Yue Li contributed to this article; Dow Jones Newswires; (8621) 6120 1200; yue.li@dowjones.com
