20000216

Comex copper futures mired in quiet consolidation

NEW YORK: Comex copper futures moved sideways on Monday, still consolidating last Thursday's rally but feeling some pressure from early falls in London metals, dealers said.

"All base metals are off a little bit but there is not much action that I've heard of," said a New York futures broker.

Benchmark March eased just 0.10 cent to settle at 84.40 cents a lb. Spot February ended at 84.25 cents, off 0.05 cent, and May slipped 0.10 to 85.45 cents.

On Thursday, March copper jumped 3.00 cents before ending at 84.95 cents, a 2.75 cent gain. But a lack of follow through prodded prices downward on Friday.

LME three-months copper closed down $9 at $1,862 a tonne, sticking to a $1,850-$1,885 range and waiting for fresh fundamental news to break higher. LME aluminum, nickel, lead and zinc also fell.

With little inspiration, most traders expect copper to remain rangebound.

On a technical basis, interim support for Comex March lines up at 83.80 and 83.25 cents, with resistance at 85.30 cents, Friday's high. Higher up, the 88.50 contract high set Jan 20 remains the key level.

"The market appears to be consolidating between 80 cents and the recent high," said David Rinehimer, head of commodities research at Salomon Smith Barney. "I still think we should hold 80 cents and go up toward 90 cents as we see some modest supply tightness develop."

On the physical side, industry sources said the US copper scrap market remains mostly balanced but dealers are anticpating a spike in demand as China buyers gear up to do business with American exporters after ringing in the Chinese New Year. The Chinese ushered in the Year of the Dragon on Feb 5.

In industry news, Mitsubishi Materials Corp said Monday it has no intention of boosting its domestic copper output but will rather focus on increasing the value added benefits from fabricated products.

The company further intends to increase its operations in recycling scrapped cars and home appliances by utilizing its refining technology, incrementally raising its nonferrous metal output.

LME stocks were down 175 tonnes to 800,975 tonnes on Monday while Comex stocks were off 192 short tons at 95,195 tons on Friday.

Estimated final volume for Comex copper was 8,000 contracts, compared to Friday's official turnover of 6,110 contracts.

The nine-day relative strength index for March copper was little changed at 61, versus 62 on Friday. Technical analysts usually interpret an RSI reading of 70 or high as indicating overbought conditions and 30 or lower as oversold. -Reuters