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Comex copper ends week firmer on short covering

NEW YORK: Comex copper rallied Friday to finish higher on light short covering, but the market remains shaken by recent long liquidation and the absence of funds in long positions, dealers said.

"The volumes today were just absolutely miserable," said one New York broker. "As far as trying to get any arbitrage done, whether on the Comex side or the LME (London Metal Exchange) side, we're having trouble getting quotes."

Final estimated volume for Comex copper reached just 9,000 contracts, and Thursday's official tally was a mere 7,799 contracts.

Active May rose 0.60 cent to stand at 80.30 cents a lb, its high close for the week, trading 78.80 to 80.55 cents.

Spot March gained 0.55 cent to 78.10 cents a lb and the rest were 0.40 to 0.60 cent firmer.

Scott Meyers, technical analyst at Pioneer Futures said the firmer close "does set the stage for a higher opening after a bad week."

"I think the key to this whole move is how we behave in the gap between 81.30 and 82.70" cents a lb, Meyers said.

Traders pegged near-term support in May copper at 78 cents a lb and resistance at 81 to 81.20 cents.

"The stock market has rebounded a bit this week and I think that's why copper is kind of holding on to see what kind of numbers we get this month," Meyers added. "Copper is tied to the economic picture right now.

At week's end, many participants appeared sidelined as the market remained unnerved by rising LME warehouse stocks and steady fund selling.

The exodus of funds combined with contract switching since last week broke key support levels on Monday, setting new three-month lows and triggering sell-stops.

"I think we're in a period of consolidation here," a broker said. "We've tested the lows and we've been able to hold them. $1,750 (basis LME three-months copper) is a good level of support and $1,810 is the upside target."

In London, three-months copper rallied to a firmer close at $1,761 a tonne, $7 higher from its previous settlement, owing to a late bout of short covering in the afternoon kerb, dealers said.

LME stocks jumped nearly 25,000 tonnes Feb 25, and then rose again by 10,250 tonnes on Thursday. Analysts said that the market was undermined by its record warehouse supplies.

In industry news, mining company Billiton Plc said it was forming a global biotechnology joint venture with Chile's state-owned Codelco to use bacteria in copper production.

The 50/50 company will use certain micro-organisms to dissolve metal in tanks from sulphide ores. The first commercial scale project will be in Chile at the Mansa Mina prospect, adjacent to Codelco's Chuquicamata mine, where a prototype 20,000 tonnes-a-year bioleach facility will be built.

Chile is the world's leading copper producer.

On Friday, LME stocks fell 2,400 tonnes to 831,750 tonnes, while Comex stocks rose 70 short tons to total 95,808 tons in Thursday's report.

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