US copper futures drifted lower at the open on Tuesday, with small-lot speculative sales keeping Monday's rally in check and business light ahead of the Independence Day holiday in the US, floor dealers said.
The New York Mercantile Exchange's energy and commodity markets will be closed on Wednesday, July 4, for the US Independence Day holiday. Trading will resume on Thursday.
Copper for September delivery was off 1.95 cents at $3.5075 a lb by 10:10 am EDT (1410 GMT) at the New York Mercantile Exchange's COMEX division, holding near the lower end of its morning range between $3.4945 and $3.56, its highest level since May 14.
By 9:00 am, futures volumes were estimated at 3,449 lots. "It's very quiet. We're off a bit on some small lot sales, but overall, it looks like the funds are getting long again...open interest is rising and prices are up near their highs. I don't think they'll push it lower today given the strike situations in Chile," said one floor dealer on the floor of the exchange.
A recent slide in the dollar against the euro has been a big factor in copper's ability to test the upper end of its recent trading band, traders said, as dollar-denominated assets, like copper, typically attract interest from non-US investors.
In morning trade in New York, the euro eased to $1.3615, hovering near a record high around $1.3680 hit in April. In economic news, new orders at US factories fell a smaller-than-forecast 0.5 percent in May, logging the first decline in four months, the Commerce Department said on Tuesday.
Analysts polled by Reuters were expecting orders to slide 1.2 percent. April orders were revised higher to show a 0.5 percent gain from the 0.3 percent rise first reported. Fundamentally, an eight-month low in London copper stockpiles, coupled with ongoing and potential industrial action around the globe have provided additional price support.
London Metal Exchange copper inventories fell 575 tonnes to 112,025 tonnes on Tuesday, their lowest level since last October, and less than three days worth of global consumption. COMEX stocks were unchanged at 22,123 short tons on Monday. Meanwhile, with little development involving several labour disputes in North and South America, analysts expected the market to be underpinned at these higher price levels.
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