By Glenys Sim
Jan. 12 (Bloomberg) -- Copper futures climbed the exchange- imposed 5 percent daily limit in Shanghai as some investors closed their short positions after arbitrage traders had pushed down Shanghai prices.
Some investors had bought copper in London and sold the metal in Shanghai to take advantage of the price gap between the two. Up to Jan. 8, copper advanced 21 percent from its five-year low of 22,210 yuan ($3,248) a ton on Dec. 26 in Shanghai, while London prices gained 13 percent.
``Chinese consumers took advantage of lower overseas prices to stock up ahead of the Chinese New Year,'' Li Rong, chief analyst at Great Wall Futures Co., said from Shanghai today. ``We're definitely seeing more arbitrage trade.''
Copper for March delivery on the Shanghai Futures Exchange gained 1,340 yuan from the previous settlement to 28,140 yuan a ton, while London Metal Exchange copper gained as much as 3.5 percent to $3,520, and traded at $3,480 a ton at 11:58 a.m.
``Some short sellers took advantage of the lower domestic prices to close out ahead of the New Year,'' said Li. The Chinese New Year takes place at the end of this month.
Inventories of copper in London Metal Exchange warehouses stood at 363,575 tons Jan. 9, the highest since January 2004, as a faltering global economy damps demand for the metal used in electrical wiring and pipes.
Among other LME-traded metals, aluminum was up 1.2 percent to $1,588 a ton, zinc added 1.5 percent to $1,315, and lead gained 0.6 percent to $1,212. Nickel fell 0.5 percent to $12,120 a ton, while tin had not traded as of 11:18 a.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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