20000224Comex copper ends down on fund sales and rollovers

NEW YORK: Comex copper futures finished easier Tuesday on continued fund liquidation and March-May switching with locals providing some light support underneath, dealers said.

"We're in a period of liquidation," one trader said. "It's six days to first notice day and there are 30,000 Marches that need to be rolled over," he added.

Comex statistics as of Friday indicated May open interest at 15,919 contracts, still less than half the 32,272 outstanding contracts left in March, which enters notice period next Wednesday.

Fund selling in March copper chipped away at its near-term support level of 82 cents, grazing 81.80 cents for the day's low. Locals were seen shortcovering just under the market, helping to brace futures prices, traders said.

"Actually, we probably would have been lower if it weren't for nickel copper has been following the other metals around," one trader said. On Tuesday, nickel shot to new five-year highs of $10,200 a tonne on the London Metal Exchange on increasingly active stainless steel production and other factors.

Active March ended down 0.45 cent at 82.75 cents a lb after trading 81.80-82.80 cents. Spot February lost 0.40 to 82.55 cents and May slipped 0.45 to 83.85 cents.

Floor sources said Comex copper garnered support under the 82-cent level, basis March, as LME copper fared comparatively better in earlier trading.

"London was only down about 80 or 90 points, so it was arbitrage buying," a dealer said.

LME three-month copper gained $12 to finish at $1,833 a tonne, riding nickel's coat-tails as did the other LME markets, dealers said.

LME traders had predicted on Tuesday that a copper close below support of $1,820 a tonne may lead to a test of the $1,805 a tonne figure.

The market believes copper is likely to reach supply and demand balance in 2000/2001 from a present global surplus, which industry experts say is bullish for the red metal.

However, other economic data including possible interest rate hikes were seen pressuring most market sectors, including copper, analysts said.

In industry news, exports and output of copper in the Commonwealth of Independent States will rise again this year, according to a report by Macquarie Equities.

Production from Russia, Kazakhstan and Uzbekistan rose by 14.5 percent in 1999 to 1.18 million tonnes and was expected to rise by a further 4.2 percent in 2000 to 1.23 million.

Traders peg near-term support for March at 81.80 cents with resistance at around 85.00 cents.

"The upper part of the range is 85, so we've got a lot of leeway on the upside," said a trader.

Estimated final volume was 16,000 contracts versus Friday's tally of 2,890 contracts. Comex was shut Monday in observance of US Presidents Day.

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