Shanghai Copper Retreats Amid Ample Spot Supplies

SHANGHAI, May 26 -- Shanghai copper gave up early gains on Tuesday as ample supplies in China weighed on spot prices, but traders said any further dollar weakness could support global metal prices in coming sessions.

    The third-month Shanghai copper futures contract, July, eased slightly by midday to 36,700 yuan a tonne after rising by almost 2 percent in early trade. The most-active September contract fell 150 yuan to 36,650 yuan.

    Copper traded on the London Metal Exchange copper for three-month delivery fell $5 to $4,605 a tonne as of 0438 GMT.

    "Copper prices in Shanghai retreated, as domestic spot prices did not perform well today. We have imported a lot and there is more on the way. I do not think the current fundamentals could support a large rise," said analyst Zhu Yanzhong at Jinrui Futures in Shenzhen.

    China's imports of refined copper rose to a third straight record in April and stoke concerns that the world's top consumer is overbought.

    Shanghai markets will be closed from Thursday for a four-day long weekend.

    "However, some bullish factors are still there including the falls in the U.S. dollar. I think Shanghai prices will hover around the current level until a clear direction on London prices shows up," Zhu said.

    Analysts said movements in the U.S. dollar, which is hovering near five-month lows against an index of major currencies, was the main driver for metals markets currently.

    "The U.S. dollar is hovering around 80, an important psychological barrier, and I think the downside pressure has not eased," said senior analyst Lin Hui at Orient Securities Futures in Shanghai.

    The dollar fell last week as concerns that U.S. government debt may lose its AAA rating prompted investors to sell the world's reserve currency.

    Growing geopolitical tensions over North Korea after it conducted a nuclear test on Monday had limited impact on metals markets.

    North Korea is ready to fire another short-range missile off its west coast either on Tuesday or Wednesday, Yonhap news agency quoted a South Korean official as saying.

    (Source: Reuters)