Copper futures in Shanghai settled sharply higher Wednesday sparked by domestic shortage concerns after the State Reserve Bureau sold most of its supply in its third auction this month.

The benchmark January 2006 contract on the Shanghai Futures Exchange shot up 960 yuan (US$119) per ton to 37,410 yuan, after hitting an intraday high of 37,770 yuan.

The stockpiling agency Wednesday in Beijing auctioned most of its copper reserves in Shanghai at prices above 38,000 yuan per ton. Market players expected the price to be around 37,600 yuan.

In the Changjiang Nonferrous Metals Trading Market, one of the major spot markets in eastern China, spot copper was quoted at 38,350 yuan to 38,650 yuan per ton on Wednesday compared with 37,850 yuan to 38,500 yuan a day earlier.

Also, more than 6,000 tons out of the 20,000 tons offered in Wednesday's auction weren't sold because of their storage in northern China, where traders from the south are unwilling to bear transport costs.

On November 23, some copper also failed to be auctioned due to quality and location concerns.

More copper auctions are expected in the coming weeks as domestic demand couldn't be met by the last three auctions, market sources said.

China has held three weekly auctions to sell copper from its inventories since November 16 to try to ease global prices and limit losses from a trader's bad bet on a drop in prices on the London Metal Exchange.

Copper prices have risen about 35 percent this year.

(Shanghai Daily December 1, 2005)