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Comex May copper gains amid fund interest

NEW YORK: Comex copper futures jumped Tuesday amid early fund buying and short covering, but stiff resistance capped the gains, traders and analysts said.

"We're at the upper end of our range, which has been 78 to 81 cents (a lb, basis May)," said a trader. "There is resistance there and at $1,780" a tonne on the London Metal Exchange (LME).

Key May copper rose 1.30 cents to 80.30 cents a lb, ranging from 78.70 to 81.00, spot March added 1.35 to stand at 79.35 cents and other months were up 1.05 to 1.35 cents.

Traders said that prices receded from intra-day highs as arbitrage selling and long liquidation near the close left copper stalled within its now familiar range.

"Most of the volume was in the morning when London was open," said a floor source.

Asked whether May copper still had the momentum to break up through the 81-cent level, one trader said "until it gets through there, I'm not convinced.

"My feeling is you sell it there and buy it back around (79.00)," he said.

A decline in LME warehouse stocks and strong consumer demand likely prompted short covering while investment funds went long the market, according to one analyst.

Refco's James Steel said European copper consumption was "particularly good," noting that steady buying was expected from automobile makers.

"Wire, rod and mill demand is very good," Steel said. "Mills are booked out to the second quarter, and construction demand for copper is picking up too. There is firmly-based end user business."

LME warehouse stocks fell 4,225 tonnes to 828,450 tonnes on Tuesday, while Comex stocks rose 47 short tons to 96,315 tons in Monday's report.

Steel put near-term support in Comex May copper at 80 cents a lb, while resistance was pegged at 82 and then 83 cents.

LME three-months copper finished the afternoon kerb $32 higher at $1,771 a tonne, reaching the top-end of its technical range between $1,735 and $1,775/80.

In other news, demand for physical copper is poor ahead of the second quarter because consumers are already well stocked, according to London dealers.

Most LME physical copper is currently bound for China, they said.

Final estimated volumes for Comex copper totalled 10,000 contracts, against Monday's official tally of 6,048 contracts.

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