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  • Oct 29th, 2005
  • Comments Off on Comex copper ends off lows in volatile trade
US copper futures ended a choppy session in negative territory on Thursday on some speculative and option-related sales as an end to a strike at a Group Mexico smelter and talk of a large delivery of copper stocks from China's State Reserve Bureau were seen pressuring prices, dealers said.

"If we see a build in Shanghai numbers, I think we're going to see the market under pressure tomorrow," said one broker.

Copper for December delivery ended 1.40 cents lower at $1.8040 a lb. at the Comex division of the New York Mercantile Exchange, after dealing from $1.7950 to $1.8285. Last on Thursday, December copper set a contract peak at $1.8580.

Support in December was pegged at $1.7225 a lb., while resistance was seen at $1.8580 to $1.86.

"The market, several times, showed its resiliency at the $1.80 level, but each time it bounced after hitting it, it actually made a lower high, which might suggest we're a little overbought," said one dealer.

Spot October sank 3.40 cents at $1.9340 as traders liquidated their long positions ahead of the contract's expiration at the end of trade.

On Wednesday, the spot contract set a new records high at $1.9890 a lb. Comex estimated final copper hit 21,000 lots, against 18,086 lots on Wednesday.

On Wednesday, copper prices received a mild boost following news that about 1,000 workers walked off the job on Tuesday at a major Group Mexico copper smelter and refinery that principally serves the company's giant La Cardiac mine.

Later on Wednesday, workers agreed to end the one-day strike, and evening shift employees partially restarted operations at the Nacozari smelter and refinery.

Offering support was another drawdown in copper inventories. LME copper warehouse stocks were down 1,050 tonnes at 61,775 tonnes on Thursday. Comex copper inventories were unchanged at 3,690 short tons in Wednesday's data.

Rumours have been circulating the market that China's Reserve Bureau was likely to release some 30,000 to 50,000 tonnes of copper from its stockpile to cut high domestic prices.

In other news, Chile, the world's biggest copper miner produced 430,058 tonnes of the red metal in September, down 3.9 percent from the same month last year, the government statistics institute said on Thursday.

The dollar sagged against the euro on Thursday, after a steep fall in US durable goods orders and a probe of General Motors Corp by US securities regulators undermined confidence in the US economy.

US September orders for durable goods, or long-lasting industrial items, fell 2.1 percent, nearly double the 1.1-percent decline forecast by economists.

The data extended the decline of the dollar which gathered pace after GM said it had been subpoenaed by the US Securities and Exchange Commission as part of a probe into its accounting practices and other matters.

"The market ignored two bits of supportive news today, which only a few weeks ago would have boosted us into higher territory, so it seems we may be a little overbought," a trader said.

In afternoon New York trade, the euro rose to $1.2133 from around $1.2130 shortly before the US data, and off its highs at $1.2174 hit in the day.

London three-month copper ended lower at $3,904 a tonne, down $11 from Wednesday's kerb close. The range spanned $3,880 to $3,956 a tonne.

Copyright Reuters, 2005


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