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Comex copper ends lower as funds extend exodus

NEW YORK: Comex copper futures sagged Wednesday amid continued fund selling as speculators covering short positions were unable to stave off a downturn, traders and analysts said.

Tim Evans, senior commodity analyst at Pegasus Econometrics Group said that Wednesday's price action confirmed that the copper market is "not quite done liquidating longs.

"There is some risk that if we break down below 78 cents in the May contract, we pull in some short selling by technical types who say 'we're still in a downtrend phase - let me sell a few.'"

Active May eased 0.50 cent to 78.95 cents a lb, ranging between 78.15 to 79.45 cents, spot March slid 0.55 cent to 77.85 and the rest lost 0.50 to 0.55 cent.

Prices fell for the second straight session after support levels on the London Metal Exchange (LME) gave way, sending the market down near its 200-day moving average at $1,729 a tonne.

LME three-months copper finished at $1,728 a tonne, down $21 from Tuesday's close on long liquidation by investment funds.

One technical source noted that Comex May copper would reflect a double bottom if prices fail to break under 78 cents a lb and instead rise toward resistance at the 81-cent level.

Chartists pegged near-term support in Comex May copper at 78.00 cents a lb.

Evans took the view that copper could be poised to rally over the next month or so, based on previous market trends during this time of year.

"Copper prices normally make a seasonal high in mid to late April," Evans said. "That in itelf may be wearing on sentiment."

In industry news, Chile's state-owned copper giant Codelco said Wednesday its output of the red metal reached 1.615 million tonnes last year, up from the 1.501 million produced in 1998.

Codelco said its Chuquicamata division produced 630,067 tonnes in 1999, Radomiro Tomic 190,104 tonnes, Salvador 91,702 tonnes, Andina 249,328 tonnes, El Teniente 346,283 tonnes and El Abra, in which Codelco owns a 49 percent stake, 107,856 tonnes.

In other news, Canadian metal miner Noranda Inc. awarded a contract to engineering group SNC-Lavalin to upgrade its Altonorte copper smelter near Antofagasta, Chile.

The project will double the annual concentrate treatment capacity to 820,000 tonnes, and is expected to be completed in early 2003.

LME copper stocks rose 4,675 tonnes to 842,975 tonnes on Wednesday, while Comex stocks were up 172 short tons to 96,074 tons in Tuesday's report.

Final volumes for Comex copper were estimated at 10,000 contracts, against the previous official count of 8,350 contracts on Tuesday.

Comex is a division of the New York Mercantile Exchange. -Reuters