Shanghai, LME up, heading for strong Q1 close

By Nick Trevethan

SINGAPORE (Reuters) - Copper futures opened higher in London and Shanghai on Monday, heading for their strongest quarterly performances in at least 18 months, and prices are expected to remain high, despite worries about global growth.

The most active June copper contract on the Shanghai Futures Exchange rose 190 yuan, or 0.3 percent, to 66,350 yuan ($9,464) a tonne at 0214 GMT. Prices are up 17 percent since the end of last year, their strongest performance since the third quarter of 2006.

In contrast, Asian equity markets have had their worst performance in five years, with the MSCI index, excluding Japan down nearly 14 percent.

"I haven't seen a lot of profit taking, so I don't expect a drastically different performance at the start of second quarter. If London does well, Shanghai will be stronger," said Pang Ying, an analyst at Shenzhen Rongtop Trading Co.

"The drop in stocks last Friday is helping Shanghai copper to stay firm despite the fall in London," Pang added.

Shanghai copper stocks fell 12,217 tonnes, or 18 percent last week, to 55,067 tonnes. Combined stocks in London Metal Exchange, Shanghai and COMEX warehouses were 182,744 tonnes at the end of last week, versus 236,765 tonnes at the end of 2007 and 259,972 at this time last year.

But high prices and the cost of financing stocks meant consumers were forced to run on very low stocks and only buy metal in limited quantities, even through the traditionally strong demand period of the second quarter.

"Shanghai copper is likely to fluctuate around these high levels," Lin Hui, an analyst at Orient Futures Securities, said.