SHANGHAI: The prices of copper futures contracts in Shanghai surged to intra-day limits yesterday for the second time in a week, a strong indicator that the market's correction since mid-May is coming to an end.

Copper for delivery in September the most-traded contract closed at 65,020 yuan (US$8,127) a ton yesterday, up by 3,090 yuan (US$386) from last Friday's closing.

The current price compared to around 55,000 yuan (US$6,875) in mid-June when market correction on the strengthening US dollar brought down the price. Prior to the correction, copper futures surged to record highs of around 85,500 yuan (US$10,687) in mid-May, driven by both strong demand from developing countries such as China and buying by funds looking for good returns.

"By the third week this month, copper will reach 68,000 yuan (US$8,500) a ton at the Shanghai exchange)," predicted Wu Bowen, a trader at the Jinpeng Futures Brokerage Co.

Copper and other commodity futures started picking up mainly due to the US Federal Reserve's statement last Thursday, which indicated further interest rate increases may be unlikely, said analysts.

It boosted the federal funds rate by a quarter of a point to 5.25 per cent last Thursday, the highest level in more than five years. But it said further interest rate increases "may yet be needed" to fend off inflation.

On the domestic front, the Yanggu Xiangguang Copper Co a new copper plant located in East China's Shandong Province confirmed recently it is to delay production until the middle of next year, which could lead to a reduction of the nation's copper supply by 200,000 tons per year.

Source: China Daily