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Comex May copper settles easier in lackluster trade

NEW YORK: Comex copper futures drifted lower Wednesday after an absence of fresh buying in the trading gap left early gains largely unsupported, dealers said.

Prices had broken through their well-worn range to touch 82.60 cents a lb, the highest level since Feb 28, but later came off after three-months copper edged lower on the London Metal Exchange (LME).

"It looks like some of funds came back in (the market) today, because we're filling up the gap," said a trader. "They came in with some sell orders, probably London arbitrage," he added.

Active May copper ceded 0.15 cent to 81.70 cents a lb, ranging from 81.35 to 82.60, while spot March lost 0.10 cent to 80.90 and others shed 0.05-0.30 cent.

"We broke out of that 82.25-82.40 area, but then hit some light scale orders up top," said one source on the floor. "Then we ran back down a bit."

Copper was confined in a narrow technical band since last month's fall on news of record high warehouse inventories. However, prices were recently ticking higher owing to the trend of falling stocks on the LME.

Tim Evans, a senior commodity analyst at Pegasus Econometrics Group, said that stock drawdowns were helping the market, as was positive fundamental news including bullish housing starts and a virile U.S. economy.

"I think the demand side of the market is in pretty good shape," Evans said. "But, that said, I don't think the upside progress has been all that impressive," he added.

From a technical perspective, the market did not capitalise on good buying opportunities, like the double-bottom at 78 cents, according to Evans.

LME warehouse stocks tumbled a further 5,950 metric tonnes on Wednesday to 790,150 tonnes, having fallen by over 50,000 tonnes in the last two weeks.

In LME trade, three-months copper slumped at the close, finishing down $8 at $1,794 a tonne after fresh buying stalled near key-level 1,800.

London traders said copper may be primed to test support at $1,775 a tonne after failing Wednesday at the top of its range.

In industry news, Grupo Mexico, will invest about $677 million in refined copper facilities in Mexico, the United States and Peru, a company official said according to the Reforma newspaper on Tuesday.

Grupo Mexico is the world's third-biggest refined copper producer, having bought U.S. metals firm Asarco Inc. for $2.25 billion late last year.

The nine-day relative strength index (RSI) for May copper slipped to 61 on Wednesday, down from 64 at Tuesday's close.

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

Final estimated volumes for Comex copper reached 13,000 contracts, compared with Tuesday's official tally of 9,127 lots.

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