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Comex March copper up on consumer, local interest

NEW YORK: Comex copper futures firmed on Thursday amid buying activity by consumers and locals as copper broke up out of its recent narrow trading range, dealers said.

"Apparently, it's locals following London up," said a broker. "A lot of the (arbitrage) guys are in New York and the locals are coming in," a floor trader said. Consumers were seen buying after prices dipped early in the session.

Active March rose 0.80 cent to close at the day's high of 83.60 cents a lb, touching a low of 82.25 cents. Spot February gained 0.85 cent to 83.35 cents a lb and May climbed 0.85 to 84.65 cents a lb.

Estimated final volume for Comex copper on Thursday reached 12,000 contracts, compared to official volumes on Wednesday of 7,217 contracts.

Analysts said that Comex copper was still consolidating in the low-to-mid-80-cent range. Many participants were away from the market this week at the annual Copper Club meeting in New York.

"There hasn't been a lot of news out to move prices," said David Rinehimer, head of commodities research at Salomon Smith Barney.

Positive economic data, including stronger than expected housing start figures released on Wednesday, appeared bullish for copper. However, that news may have been overshadowed by the "specter of rising interest rates", Rinehimer said.

"The economy continues to grow strongly, which could be a constraining factor as far as demand growth" is concerned, he added.

Analysts pegged near-term support in March copper at 81.25 and resistance at 85.20.

In news from the American Metal Market Copper Forum, Merrill Lynch first vice president Dan Roling said that continuing consolidation and acquisitions would likely dominate the copper industry.

"The top eight producers still account for less than 50 percent of global refined copper production, thus there is still plenty of room for consolidation," said Roling.

In 1999, global output was seen by Merrill Lynch at 14.2 million tonnes with consumption at 13.3 million tonnes and inventories at around 1.2 million tonnes.

In 2000, Roling expects little change, with output forecast at 15.1 million tonnes, consumption at 14.9 million tonnes and total inventories holding at roughly five weeks' supply, or 1.4 million tonnes.

On the London Metal Exchange, three-months copper had a late run-up of $11 a tonne to finish at $1,844, fuelled by speculator buying in this week's thin market.

One LME analyst said that although Thursday's copper gains were "constructive", prices could still turn around to test the $1,800 a tonne level in the near-term.

LME copper stocks were down 1,350 tonnes to 796,850 tonnes on Thursday while Comex stocks were up 23 short tons at 95,001 tons on Wednesday.-Reuters