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Comex copper pierces support, ends sharply lower

NEW YORK: Comex copper futures on Monday spiraled below key support levels to touch new three-month lows amid heavy fund liquidation ahead of first notice day.

Traders said March copper came under pressure as technical selling triggered stops, pushing the metal to its lowest close since Nov 15.

"There were waves of sell stops at various points and no buyers in sight," said Richard Hirsch, president of Sogemin Metals. "It looked like it was very fund-oriented, and some merchant copper selling as well."

Spot March ended down 3.40 cents at 78.10 cents a lb, trading from 81.50 to a three-month low of 77.90.

The May contract lost 3.35 cents to stand at 79.40 cents a lb, while back months fell 2.50 to 3.35 cents.

As traders eyed copper's decline on the London Metal Exchange, funds ditched long positions in advance of Tuesday's first notice day for March copper delivery.

"We opened up lower because London went through stops below $1,800 (a tonne)," said a floor trader. "Then we went through stops -- it's all liquidation, it's all technical."

"There's no news that I know of," he added.

Hirsch said that copper, like other markets, was subject to a "background malaise" based on negative economic factors including the possibility of additional interest rate hikes, volatile gold and oil prices, and the threat of inflation.

"The funds started in January when they overbought copper, so that trend has been with us" (since then), Hirsch said. "But we certainly fell off a cliff today."

Hirsch noted that copper closed near its session lows, adding that it was difficult to determine a firm technical support level for prices

"The copper sell-off was huge, but I'm not sure its finished," he said.

After copper stocks in London rose on Friday by nearly 25,000 tonnes to set a new record, traders nudged prices below support at $1,800 a tonne in today's session.

Sell stops underneath support provided the spark in quickening the sell-off on both Comex and LME, dealers said. LME three-months copper dropped to $1,745 a tonne at session's end, its lowest since Dec 15.

LME copper stocks on Monday were up 1,650 tonnes to 816,450 tonnes, while Comex stocks rose just 47 short tons to 95,464 tons on Friday.

Final volume for Comex copper was estimated at 30,000 contracts, compared to the official volume of 25,571 contracts on Friday.

Technicians pegged resistance in March copper at 81.45 cents.

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