New York copper futures finished with hefty gains on Wednesday, after soaring to successive new highs following a raft of economic news that portrayed US growth as steady and strong, traders said. In addition to the robust demand scenario, traders said, tight copper supplies continue to drive prices to new highs.
"As long as you don't see any visible stocks, or change in underlying issues of the market, as long as we see strikes and everything else, the upside does not seem over yet," said one New York copper dealer.
At the New York Mercantile Exchange's Comex division, benchmark copper for September delivery closed with gains of 2.10 cents at $1.6270 a lb., after reaching a new contract high at $1.6350, a 1.81 percent rise.
Spot July copper shot up 1.38 percent to a fresh all-time peak at $1.6890 per lb., its third in as many days. It ended 1.15 cents higher at $1.6775 a lb.
Though only a dozen other contracts actually changed hands, they all set new contract highs for the third consecutive session. Comex copper volume nearly doubled to 20,000 contracts from the 10,481 turnover reported on Tuesday. A drawdowns in copper inventories that brought London exchange warehouse levels near recent 31-year lows or about half a day's worth of global consumption triggered buying.
London Metal Exchange warehouses stocks fell 300 tonnes to 26,550 tonnes. Comex stocks fell by 202 short tons to 11,970. When a decline in London stocks was reported, instead of the rise expected, a trader said, "The market just took off.
Any shorts tried to cover, short covering triggered buy stops, and you (eventually) traded up to the highs of the day." London Metal Exchange three-month copper also raced to a new record level as it headed into the close.
It finished at $3,490 and peaked at $3,497 a tonne, up sharply from Tuesday's close at $3,450, and well into uncharted regions. Traders said they expect the upturned to continue, especially after several US economic reports came in stronger than expected and reinforced a healthy outlook for demand.
"At these levels, it's tough to call the market any different, but you can't be short, because the short side has not proved to be very profitable, on top especially.
I think that's going to continue," a trader said. An unexpected increase in June US durable goods orders and a jump in sales of new US homes in June both suggested demand for copper may heat up, at a time when supplies remain tight, with mine strikes and low stock levels.
And though released after the copper market's close, the Federal Reserve's Beige Book reinforced those views. The Fed's anecdotal report said US economic activity continued to expand in June and July. Most US regions reported moderate to solid manufacturing growth, with expectations for future activity upbeat.
US durable goods orders surged 1.4 percent in June, despite weaker demand for aircraft. They had been forecast to drop by 1.0 percent. US new home sales rose 4.0 percent to a new record annual rate of 1.374 million, compared with an upwardly revised 3.0 percent rise in May. The June sales pace increased 14 percent over the year rate.
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