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SHFE copper posts slight gain as investors flee risky commodities

By Michael Bellart (Global Times)

08:21, April 25, 2012

Chinese copper futures managed to pull off a small gain Tuesday as a host of uncertainties stemming from the US, Europe and China continued to grip the financial markets, undermining confidence in risky assets like commodities.

The most active copper contract on the Shanghai Futures Exchange (SHFE), for July delivery, added 0.47 percent to close at 57,600 yuan ($9,131.91) per ton.

SHFE copper opened 0.14 percent higher Tuesday, despite a 0.52 percent drop in the corresponding copper contract on the London Metal Exchange (LME) over Monday night.

Reuters reported that the three-month LME copper contract may have fallen as arbitrage traders re-exported metal from bonded warehouses in China to LME warehouses in neighboring countries.

Evidence of this could be seen in the spread between the LME and SHFE contracts. The July SHFE contract, minus China's 17 percent value-added tax, was trading about $300 per ton cheaper than the three-month LME contract as of 3 pm Beijing Time Monday. By the time the SHFE closed Tuesday, the spread had narrowed to about $223 per ton.

The three-month LME contract was trading at $8,029 per ton when the SHFE closed Tuesday, up 0.58 percent.

Other than SHFE copper, Chinese commodity futures fell broadly Tuesday as the market had little appetite for risky assets.

The January sugar contract on the Zhengzhou Commodity Exchange lost 0.84 percent to close at 6,413 yuan per ton, while the January soybean contract on the Dalian Commodity Exchange fell 0.45 percent to 4,641 yuan per ton.

Concerns over disappointing European manufacturing data and political developments on the continent weighed on investor sentiment, according to ANZ commodity analyst Natalie Robertson.

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