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Comex copper ends off amid broader market worries

NEW YORK: Comex copper futures closed with slim losses Monday as gyrations in the US equity markets weakened support across the base metals sector, dealers and analysts said.

Consumer buying below the market was unable to raise prices as liquidation by futures firms pressured copper throughout the day.

"You are seeing some anxiety over equity markets, but the weaker dollar probably curbed some of the losses in the market today," AG Edwards commodities commentator James Quinn said.

Active May lost 0.15 cent to 79.00 cents a lb, trading between 78.20 to 79.35 cents, while spot March also shed 0.15 cent to settle at 78.00 cents. Back months were off from 0.15 to 0.20 cent.

"I think by the next couple of days we should get through to 77.50 (cents a lb, basis May)," one trader said. "Maybe even a little lower than that."

Traders put near-term support in Comex May copper at 77.50 cents a lb, while resistance was seen at 81 and 82 cents.

Quinn said some market participants had expressed sentiment that Asian demand for copper may not be as strong as expected, noting increased volatility in financial markets in recent weeks and the surge in oil prices.

However, Fred Demler, minerals economist at ED&F Man in New York said that Asian demand was mixed.

"On the metals side, the construction and power sectors are stumbling a little bit," said Demler. "But autos, consumer goods, and electrical (sectors) are all performing quite well."

Demler said that the outlook for copper consumption was "generally constructive", based on news released by the International Copper Study Group in its March bulletin.

"While we see the build-up in inventories in the first couple of months this year, a lot of analysts seem to think it was more Y2k related," said Demler. "We're starting now to see a tighter market and lower prices are bringing out consumer buying."

LME copper stocks on Monday were down 3,475 tonnes at 832,675 tonnes, while Comex stocks were unchanged at 96,268 short tons in Friday's report.

LME three-months copper finished at $1,739 a tonne, down $17 in thin volume after only moderate cash interest materialised in early business.

After the metal slumped below $1,750 in late trading Friday, LME dealers expected near-term consolidation within its recent range between $1,725 and $1,800 a tonne.

Final estimated volumes for Comex copper totalled 8,000 contracts, compared with Friday's official count of 5,288 contracts.

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