US copper futures reversed losses to close slightly higher on Wednesday as red metal traders took their cue from a rebound in global equities and stabilising precious metals markets, analysts said.
"I think you had a lot of technical buying in silver, spilling into the copper. You also have the Dow up, so any time you see a stronger market condition you're going to see increased attention in the metals," said Zachary Oman, futures analyst with Wisdom Financial.
Copper for July delivery settled up 2.60 cents to $3.3130 a lb. on the New York Mercantile Exchange's Comex division, recovering from a 2-1/2-week low at $3.21 in electronic trading and climbing as high as $3.3230.
Traders pegged near-term support in July copper at around the May lows at $3.1650 to $3.17, while resistance continued to be seen at $3.50. Final estimated copper futures volumes hit 25,978 lots, in line with Tuesday's official count at 23,253 lots.
As of June 12, open interest in Comex copper futures fell 869 lots to 76,962 contracts. Speculation that rising inflation in China will force the country to boost interest rates sparked a wave of cross-asset selling this week amid fears higher interest rates will slow economic growth and put a crimp in demand for industrial metals, like copper.
On Tuesday, the Chinese government reported annual consumer price inflation of 3.4 percent for May, it's highest in more than two years. "They (China) have to carry that fine line in between what is too much inflation and what is not. I think the world, in a sense, is reacting to what's going on in China and China is not really doing too much about it at this point," Oman said.
"The trade tariffs and other barriers seem soft," he added. Chinese demand worries were further inflated after trade data showed imports of copper, including semi-finished products, fell 28 percent in May. Lingering threats to the markets supply chain and dwindling global stockpiles continued to keep copper bulls in the game. Strata Plc's CCR copper refinery in Montreal will continue to operate at a reduced rate after 430 workers went on strike, the company said on Tuesday.
In Chile, workers at Collahuasi, one of Chile's largest copper mines, planned to demonstrate this week to demand an improved labour contract proposal from mine managers.
In Mexico, a threatened strike at the Cananea copper eight other facilities and mine would begin on Friday if no deal were reached with mine owner Group Mexico.
Meanwhile, union workers at two copper mines and a smelter in Peru owned by Southern Copper Corp have broken off wage talks with the company and are threatening to go on strike, union leaders told Reuters on Wednesday.
London Metal Exchange copper warehouse stocks fell 450 tonnes to 119,875 tonnes on Wednesday, while Comex stocks were down 270 to 25,843 short tons on Tuesday. LME copper for delivery in three months settled at $7,290 a tonne, up 1.6 percent or $115 from Tuesday's kerb close.