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Comex copper ends down, hit by fund selling

NEW YORK: Comex copper futures finished lower on Monday after a spate of fund liquidation at the opening bell drew in mixed selling, market sources said.

"Right off the opening, there was some fund selling of about 1,200 lots of May and locals all went short with them," said one floor source. "A lot of them covered down below, but I still think the ring is short."

Active May ended down 0.85 cent at 80.25 cents a lb, ranging from 79.50 to 81.15 cents, while spot March lost 0.95 cent to 79.50 cents.

Back months pared 0.60 to 0.85 cent.

Local-led short covering and scattered trade buying were unable to lift prices later in the session and failed to reverse the downtrend, floor sources said.

Many dealers said they had expected increased buying as inventories continued to decline, but players were waiting for prices to stabilise before showing renewed interest.

"The market failed to fill the gap down to 79.30," AG Edwards commodity commentator James Quinn said.

Quinn said that participants were not necessarily discouraged by the early slide. "You've had one week plus of stock declines in London and prospects of even more, so I think people are a little nervous about that."

Traders pegged near-term support in May copper at 79.70 and 79.35 cents a lb and resistance at 80.60 cents.

LME warehouse stocks lost 4,225 tonnes to 774,925 tonnes on Monday, and Comex stocks dropped 262 short tons to 95,786 tons in Friday's report.

In London trade, three-months copper ended $18 lower at $1,762 a tonne, having found support from its 200-day moving average around $1,750/60.

In industry news, Chilean copper production reached 361,223 tonnes in February, up 6.5 percent from February 1999, the National Statistics Institute said on Monday.

The government agency said concentrate output reached 177,294 tonnes while electrolytic output was 171,775 tonnes in the second month of the year.

The increase came from the start up of the Los Pelambres mining project and through additional output from the Escondida and Cerro Colorado mines.

Chile is the top copper producing nation.

Final estimated volumes for Comex copper reached 11,000 contracts, against the previous official tally of 7,762 lots on Friday.

The nine-day relative strength index (RSI) for May copper sank to 35 on Monday, down from 48 on Friday.

Technicians said an RSI reading of 70 or higher usually indicates that a market is overbought, while 30 or lower means it is oversold.

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