The active July futures slid below the key 15,000 psychological support to 14,980 yuan ($1,809), down 150 from last Friday's close.

The contract soared the three-per cent daily limit on Tuesday and gained a total of 5.73 percent on the week. It hit an all-time low of 14,310 yuan on March 17.

"We think the short-term upside move is over," an analyst said. Last week's rally was fuelled by short-covering as many overseas funds, which had built up heavy short positions on the London Metal Exchange during the metal's downward spiral, had to cover when prices spiked up. Part of the short-covering was made in options trade, the analyst said. "Some of the call options could have been offsetting positions to protect the funds' open short positions in forwards," he said.

Open interest in the Aprilcalls at $1,425 and $1,450 strike prices rose sharply during the rally, indicating delta-hedging at work, said the analyst, who asked not to be identified.

Delta hedge is a risk offsetting position in derivatives that matches the market response of the underlying position.

The analyst said hedge funds appeared to have modified their outright bearish views on copper after LME three-month copper hit $1,380, the lowest in over 12 years, in late February.

But in view of global copper surplus, funds took out call options on underlying warehouse stocks to stake out their positions if the copper's fundamental demand improved, while keeping some of their short positions in forwards.

Traders said many Shanghai players, unnerved by the volatility and arcane trades in the overseas markets, felt more assured trading on the local spot market.

"Importers and producers are content making 50 to 100 yuan per tonne on the spot market," said a trader. "You see what you get and you sell what you have."

Spot copperprices were quoted 15,000 to 15,150 yuan, unchanged from Friday.

Other analysts said that as arbitrage linked Shanghai copper prices were closely linked to international prices, they had to live with the volatility.

"We are waiting for the smoke of the options plays to blow over," said another analyst, noting that the expiration of LME options on the first Wednesday of April would be watched closely.

He estimated that all LME warehouse stocks were worth about about $1.7 billion, which could be controlled without much difficulty by hedge funds through leverage.

"But ultimately the world copper prices have to reflect the fundamentals," the analyst said. Meanwhile, London Metal Exchange (LME) copper prices dropped $10 a tonne to $1,438 and a breach of $1,435 was seen signalling a move to $1,400, dealers said.

Aluminium held on to last week's gains and was hovering above chart support of $1,250.

"Despite the fall in copper on Friday the volume on two-way business was good. But copper is now at $1,450,a level where one does not know whether to sell or buy," Prudential Bache Securities said in a daily report.

It added that prices would head for $1,375 if they tested $1,420.

Brokers Brandeis said while the downward trend was intact a gap on the charts between $1,437 and $1,440 needed to be filled.

"On the charts a bullish cross pushed the market higher, with the RSI trading 60 percent the potential still exists for a breach through the 100 day moving average at $1,480. But sellers lurk all the way through to $1,490," Brandeis said in a report.

Meanwhile, in Tokyo, Japanese copper wire and cable shipments in the business year starting in April are likely to slip to a 22-year low, the Japanese Electric Wire and Cable Makers' Association said.

"We do not expect a sharp recovery in demand (for copper wire and cable) until 2000/2001," Michio Arai, senior managing director of the association, told reporters.

The association forecast 1999/2000 shipments totalling 879,000 tonnes, down 5.7 per cent froman estimated 932,400 tonnes in 1998/99.

Shipments for the business year are forecast to fall 9.6 per cent from a year earlier and be the lowest since 926,746 tonnes in 1983/84.

"It is the first time since 1986/87 for shipments to fall below one million tonnes...as domestic demand was slack mainly due to weakness in private-sector capital spending and in individual consumption," he said.

The association forecast that domestic shipments in 1999/2000 would fall to 843,000 tonnes, down 4.7 percent from an estimated 884,700 tonnes this business year. Domestic shipments in 1998/99 are forecast to fall 9.7 per cent from last year.

Exports are forecast at 36,000 tonnes in 1999/2000, down from an estimated 47,700 tonnes in 1998/99 and 52,200 tonnes in 1997/98, due to weak demand from other Asian countries, Arai said.

The association forecast Japanese copper wire and cable orders for 1999/2000 at 880,000 tonnes, down 4.0 percent from 1998/1999, which is likely to see a drop of 10.8 per cent.

The followingis the association's forecast for 1999/2000 Japanese copper wire and cable shipments and orders and estimates for 1998/1999, with actual data for 1997/98.

Elsewhere, the prospect of less copper from The Broken Hill Pty Co Ltd (BHP) but no major disruption to planned supplies of refined zinc from Korea Zinc Co Ltd did nothing to jolt base metals markets out of a lacklustre drift on Monday.

Copper opened slightly weaker in Australia/Asia trading on Monday, while zinc also drifted down slightly. This was despite weekend statements by BHP's chief executive Paul Anderson that copper production from the group's North American assets would shrink one way or another.

Zinc was also not affected fundamentally by the return to work of construction workers at the Korea Zinc refinery at Townsville in north Queensland.

Base metals markets had expected for some time that BHP would cut copper production from North America, one metals trader said.

They had also expected that Korea Zinc would not simply abandonconstruction of its Townsville refinery because of the month-long strike, the trader said.

Unionists who had staged a month-long strike at Korea Zinc's Townsville zinc smelter returned to work on Monday but information remained sketchy from the company about precisely when stage one of the refinery will be brought into operation.

A company source reiterated that the plant had always been targeted for start-up in late 1999, with no exact date set. This source said some slippage was likely in the start-up because of the strike, but could offer no firm information.

On weekend comments by BHP chief executive Paul Anderson that the group's North American copper operations definitely needed to be rationalised, one metals trader said: "One would have thought that that would have impacted on the copper price".

But markets had already absorbed expectations of copper cutbacks from BHP, the trader said. Korea Zinc was also never seen walking away from its Townsville refinery with stage one more than halfcomplete, the trader said. "They've spent far too much money...the banks wouldn't allow them to."

However, the trade would be surprised if the Korean group quickly went ahead with stage two of the refinery. "That will take some time I would imagine."

Stage one of the A$425 million refinery, now 57 percent complete, is designed to consume about 400,000 tonnes a year of zinc concentrates, for conversion into 170,000 tonnes of zinc metal. The status of the refinery was unlikely to affect negotiations for zinc concentrate treatment charges later this year, the trader said.