New York copper futures closed below their new historic highs on Wednesday, but still up on the day as supply worries continue to dog producers at a time when demand is seen to be on the rise, traders said.
"I don't think anything's changed (by achieving a record) as far as the market is concerned, technically or fundamentally or otherwise. I think the market still remains strong. For the time being look for high numbers," a copper trader said.
He said that the visible copper stocks should hold at long-term lows for awhile, so continued upward movement is to be expected. Copper for September delivery finished 0.50 cent higher at $1.5915 a lb at the New York Mercantile Exchange's COMEX division. But that was after it ran up to a new life-of-contract high at $1.5970 per lb.
On a spot basis, July copper raced up to an all-time high at $1.6570 per lb., and closed 0.50 higher at $1.6555.
COMEX brokers said floor business was light as the summer vacation period had slowed many desks and copper businesses.
COMEX estimated final copper volume at a light 9,000 lots, similar to the 8,723 lots traded on Tuesday.
As a result, small deals have the ability to send copper to new highs, though trade has been choppy and at higher levels.
"When you're up around record highs it doesn't take much to make a new one. It certainly makes it easier," a trader said.
Some traders said they look for an easy next target at $1.60 a lb for September copper.
Supply issues have been a major catalyst propelling the red metal to new highs.
In South Australia on Wednesday, BHP Billiton Ltd/Plc. said it halted mining at its Olympic Dam copper and uranium mine after a fatality there. The company said it expected the 226,000 tonne-per-year mine to be closed for several days after an explosion killed a mine worker. The cause of the blast was unknown.
Asarco, a subsidiary of Grupo Mexico in Mexico, said last week it would deliver less refined anode and blister copper to its customers.
Supply concerns mount when considering copper inventories were sitting around long-term lows. On Wednesday, London exchange warehouse inventories increased by 475 tonnes to 287,450 tonnes, just up from the 31-year low set on Tuesday. COMEX stocks declined by 21 short tons to 13,574 tons in Tuesday's report.
At the same time, demand seems to be strong with cash at a premium to the 3-month copper price. And, with Federal Reserve Chairman Alan Greenspan painting a bullish outlook for the US economy, some players bet demand for copper will grow.
"He is painting a positive picture so people aren't going to get bearish. But I also don't think people are going to rush out and buy lots of copper because of it," a trader said. London Metal Exchange three-months copper ended up at $3,404 a tonne on Wednesday, from $3,395 on Tuesday.
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