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Comex copper closes lower in thin rangebound trade

NEW YORK: Comex copper was unable to gain any momentum toward either end of its range on Thursday as a mix of buying and selling kept prices from making any startling moves.

Early arbitrage selling took prices lower while light shortcovering kept the decline in check. Traders are mixed on the next move with some calling for consolidation toward the upside while others suggest the widening spreads are indicative of further softening.

"There's more reason for the market to go down than there are for it to go up. There are shorts out there," said one floor trader. He pegged 82-83 cents as the target needed to bring in heavy buying.

Active March ended off 0.35 cent at 85.30 cents a lb after trading 84.80 to 85.65 cents. Spot January lost 0.25 to 84.50 cents.

The market rallied from its 83.30 cent settlement on Dec 21 up to 86.30 cents on Dec 30 before selling pressure coaxed prices lower after Y2K came and went without hitting any snags.

"This market has been reacting strong lately based on anticipation of better demand in the first and second quarter. That being based on significant Asian recovery and continued strong demand from the US and Europe," said David Meger, senior metals analyst at Alaron Trading.

"We didn't have a lot of action today but it did continue to show its strength yesterday. Most of the strength is being done on anticipation of better demand and if that demand doesn't materialise you could see some consolidation within the 82-86 cent level," he added.

London trading garnered little interest, ending lower but still up from the day's low of $1,859. The three months price closed at $1,869 a tonne, off $6.

Final volumes were estimated at 10,000 contracts compared with final estimated volumes on Wednesday of 11,000 contracts.

LME warehouse stocks were down 375 tonnes at 788,5400 tonnes in Thursday's report. Comex inventories on Wednesday were up 743 short tons at 93,037 tons.

The nine-day relative strength index for March copper ended at 54, compared with Wednesday's close of 60.

Technical analysts usually interpret an RSI reading at 70 or higher as indicating overbought conditions and a reading at 30 or lower as oversold.

"The current situation is not all that great since we still have an excess of supply situation being dragged down with an overall lack of demand in the marketplace," said Meger.

"Recently the market has been doing pretty well but still has to find the demand strength to drive the market to the next step higher which is through the 86 cent level on a close basis," he added. -Reuters