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Comex May copper settles firmer on fund buying

NEW YORK: Comex copper futures gained Wednesday amid continued fund interest, toppling near-term resistance as dealers hedged positions, market sources said.

"It's a lot of fund buying," said a trader. Copper "is moving into the gap (between 81 and 82 cents in May)," which he said the funds found encouraging. "They seem to like it because the open interest has been relatively flat since it came off."

Key May copper closed up 0.80 cent at 81.10 cents a lb after ranging from 80.25 to 81.40 cents. Spot March gained the same to 80.15 cents and the rest rose 0.45 to 0.80 cent.

Open interest as of March 14 stood at 67,287 contracts.

Copper continued the recovery pattern intiated in the last several sessions based on renewed fund interest and growing consumer demand in the Far East, sources said.

China planned to take delivery of more of the metal from European warehouses and ramp up future imports of refined copper, according to dealers and analysts.

"There are indications of Chinese off-take in the market," said William O'Neill, head of futures research at Merrill Lynch. "And I think there could be some further interest (in China) in refined copper."

O'Neill said copper has come under pressure from concerns over rising interest rates, economic growth, and high stock prices in the last month, but added that "recent lows do appear to attract some physical interest."

One merchant in the Midwest said the current copper market was finding support from a healthy consumer demand for material.

However, he noted that investment funds had more influence over movements in price because of the sheer weight of their positions, whether long or short the market.

"I think the funds run it," he said.

Warehouse stocks on the London Metal Exchange fell 6,525 tonnes to 821,925 tonnes on Wednesday, while Comex stocks rose 148 short tons to 96,463 tons in Tuesday's report.

Many dealers attributed recent gyrations in warehouse inventories to merchants moving stores on and off warrant.

In London, LME three-months copper closed the afternoon kerb up $4 at $1,775 a tonne, firming near the top of its range between $1,735 and $1,775/80.

Final estimated volume for Comex copper was 11,000 contracts against Tuesday's tally of 11,085 lots.

O'Neill pegged strong support in Comex May copper at 78 cents, with resistance 82 and 83 cents.

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