Shanghai Metals Spike to Record Highs on Strong Demand and Supply Constraints
Shanghai metals soared on Monday, with copper and aluminium prices reaching unprecedented levels driven by robust demand prospects and challenges in the supply chain. The most-traded May copper contract on the Shanghai Futures Exchange closed day-time trading 2.6% higher at 75,540 yuan per metric ton, while aluminium rose 1.6% to 20,205 yuan a ton.
The surge in metals prices mirrored the gains seen in London prices following a trading break. China’s trading activity was closed on Thursday and Friday, contributing to the pent-up demand on Monday. Three-month copper on the London Metal Exchange gained 0.3% to US$9,356.50 per ton, further emphasizing the bullish sentiment in the market.
The optimism in the metals market was underpinned by hopes of a potential US rate cut and a weaker dollar, which propelled prices higher last week. Strong manufacturing data from China and the US also boosted the demand outlook for industrial metals, with copper benefiting from potential output cuts by Chinese smelters grappling with raw material shortages.
Furthermore, supply constraints from power issues in Yunnan province have clouded the outlook for aluminium, prompting producers to scale back production amidst power shortages. The recent rally in gold and oil prices has also bolstered the metal market sentiment, according to analysts at Guangzhou Futures.
However, concerns over the timing of interest rate cuts by the Federal Reserve were reignited by higher-than-expected US jobs data on Friday, leading to a consolidation in the firm dollar and limiting gains in greenback-priced commodities.
Overall, LME aluminium, tin, lead, and nickel all saw gains, while zinc experienced a slight decline. SHFE zinc, nickel, tin, and lead also registered notable increases, highlighting the strong bullish trend in the Shanghai metals market.
