Rise in copper futures unlikely to be sustained in November

Chinese copper futures are not expected to continue rising in November, partly due to oversupply pressure in the industry, and also because market sentiment has been hit by the US Federal Reserve's decision to end its quantitative easing (QE) policy.

The most-traded copper contract for January delivery on the Shanghai Futures Exchange (SHFE) rose by 270 yuan ($44.14), or 0.57 percent, from Thursday, to close at 47,780 yuan per ton Friday. The contract was up 390 yuan, or 0.82 percent, on a weekly basis, having fallen by 10 yuan in October.

The benchmark three-month copper contract on the London Metal Exchange was trading at $6,771 per ton when the Chinese market closed at 3 pm Friday, up 0.63 percent. But the contract still ended up losing 0.24 percent for the day to 6,711 per ton.

The US Federal Reserve said in a statement released Wednesday that it would end its monthly bond purchase program, representing a more hawkish stance in its assessment of the economy. In the wake of the news, the US Dollar Index, which weighs the dollar against a basket of other currencies, surged to a three-week high on that day.

The dollar is also expected to strengthen further, due to confidence in the US economic recovery as well as the expectation of an interest rate increase. A strong dollar would curb demand for commodities by making them more expensive for holders of other currencies.

Other factors may continue to exert downward pressure on copper futures, including concerns over the still-mounting supply pressure. Statistics show that China's imports of refined copper spiked 26.64 percent year-on-year to 1.29 million tons in September, marking a high new. Domestic refined copper production also set a record during the same month at 715,000 tons.