US copper futures settled just below new record levels Thursday as short covering and spread business lifted the complex, and the overall bullishness in the red metal should further boost prices next week, sources said.
The New York Mercantile Exchange metals and energy futures and options markets will be shut on Friday, April 14, for the Good Friday holiday. Trading will resume on Monday.
Copper for May delivery ended up 4.40 cents, or about 1.6 percent, at $2.8155 a lb on the New York Mercantile Exchange's COMEX division, after moving between $2.7615 and a new life-of-contract high at $2.8190 a lb, its 12th new high in as many sessions.
Spot April rose 4.65 cents at $2.8680 a lb, just shy of an earlier all-time COMEX record at $2.87.
COMEX copper volume at noon was estimated at 16,000 lots. Final volume on Wednesday was 24,661 lots.
Fund profit-taking across the metals complex early in the day attracted other sellers, who were caught short and had to scramble to cover when the market rebounded, dealers said.
"The funds have been taking profits all along, but when the market moves like this, it means somebody is short," said one COMEX broker. Floor dealers also noted that the May/July spread continued to heat up, with first notice day for May delivery just two weeks away.
Copper, used in construction and electronic wiring, has rallied over 40 percent this year amid aggressive investment fund buying, supported by low global inventories, labour problems, and global supply disruptions. "There is not much to stop copper at the moment, but I suspect it will be very choppy," said Mo Ahmadzadeh, president of Mitsui Bussan Commodities (USA) Inc.
John Reade, metals analyst with investment bank UBS noted that while consolidation or even a correction is entirely possible at any time, "we expect investors to use any weakness to add to positions."
Meanwhile, world refined copper consumption lagged production by 60,000 tonnes in January, against a deficit of 25,000 tonnes in the same month last year, the International Copper Study Group (ICSG) said in its latest monthly bulletin.
Also, Grupo Mexico, hobbled by a 20-day strike by miners, said it would be able to meet its April copper obligations but could not guarantee deliveries further down the road. "We're reporting that April will be complied with, but after that we don't know, which is why force majeure was declared," Grupo Mexico senior executive Juan Rebolledo told Reuters.
Grupo Mexico said its Southern Copper Corp unit would step up production in Peru to help meet the shortfall at its La Caridad operation in northern Mexico.
At the London Metal Exchange (LME), three-months copper ended the day up $37 at $6,140 a tonne. Earlier it had hit a new high at $6,145 in electronic trade.
LME-monitored copper warehouse stocks fell 100 tonnes at 111,650 tonnes on Thursday. COMEX inventories were down 446 short tons at 18,119 tons on Wednesday.
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