Copper futures close higher on signs of economic recovery

Copper futures moved slightly higher on the Shanghai Futures Exchange (SHFE) Friday before the three-day Dragon Boat Festival holidays from Saturday to Monday.

Many investors are awaiting for a clear signal on whether the central government will adopt more supportive policies to spur the economy, according to a report by London-based metal information provider Metal Bulletin (MB) Friday.

"It is clear that a number of investors… were reducing their positions in the last trading session before the holiday as the outlook is still unclear for copper," MB reported, citing Xu Yongqi, an analyst from Guotai Junan Futures Co.

The most-traded copper contract for delivery in August finished at 48,640 yuan ($48,640) per ton on the SHFE Friday, up 170 yuan or 0.35 percent from Thursday.

The market ended the week with a 0.12 percent week-on-week loss. The trading volume increased by 88,436 lots Friday from Thursday's 268,892 lots.

Some analysts still hold an optimistic attitude toward the future copper market due to the increasing demand from consumers and also the recovery of the manufacturing sector around the country, which are expected to help the metal maintain an upward trend in a short term, according to a report by Henan-based Futures Daily Thursday.

For instance, the latest Manufacturing Purchasing Managers' Index (PMI) released by the China Federation of Logistics and Purchasing (CFLP) Saturday showed the PMI reading was 50.6 in May, higher than April's 50.4, indicating a recovery in the Chinese economy.

However, weakness will continue in some industries, particularly in the property market, which might have a negative impact on the recovery of the Chinese economy, according to a report by Reuters Thursday. The property market is reportedly contributing nearly 15 percent of Chinese economic growth.

In addition, according to the data released by China Customs in May, the country's refined copper imports stood at 341,405 tons in April, up 86.5 percent year-on-year.

The copper imports in May were expected to continue to surge as the domestic copper prices are still at a high level, according to the report by Henan-based Futures Daily Thursday. As a result, the domestic copper market will face the problem of oversupply in the future, the newspaper report said.