New York copper futures finished on Thursday with moderate losses after a large injection into London Metal Exchange warehouses scared some short-term players into selling at record levels, traders said.
"A lot of people are looking for the big top. They sell it in the morning and, when they don't get the big break, they have to buy it back in the afternoon.
It's been the same pattern for a while now," said a dealer at a New York bank. At the New York Mercantile Exchange's Comex division, benchmark September futures ended down 1.70 cents at $1.6545 a lb. Overnight it set a contract high at $1.6740.
Spot August copper fell 1.45 cents to close at $1.6945 per lb., after closing on Wednesday at the all-time high of 1.7090 a lb. The rest settled 0.85 to 1.70 cents lower.
"It's mostly brokers and day traders looking for the big selloff. Same on the Comex and London, they're the entire same ilk. They're all looking for the big selloff.
They saw the 3,700 tonnes stocks come into the warehouses and for them that was it the big sell off," he said. Copper has risen to record high prices in large part because of critically low exchange warehouse stock levels.
As copper advances into uncharted regions, many players become cautious, especially when a big addition to warehouse stocks shows up.
On Thursday, London Metal Exchange inventories jumped by 3,675 tonnes to 35,125 tonnes.
At Comex warehouses, stocks were down by 201 short tons at 10,288 short tons as of Wednesday. With prices at record levels, one trader noted that very little, including a rise in metal inventories could frighten short-term players into selling.
"These are scary numbers for some. You don't know where it's going. It's brand new territory. It's hard for a lot of guys to trade it, so they're hanging to the side," he said.
The thin trading conditions have kept volumes at modest levels. Comex estimated final copper volume at 14,000 lots, similar to Wednesday's tally of 13,353 lots.
Some analysts pointed out that, aside from looking overbought, technical charts look strong and supply/demand fundamentals supportive.
"The fundamentals are still very solid.
That's why the market's not going anywhere, why it's not backing off," a trader said. One factor boosting copper prices is the strikes at Asarco since July.
Output has been halved at Asarco's Arizona and Texas facilities. Talks between Asarco and the union are set to resume on August 12. On Thursday, workers at the world's No 3 copper minor, Group Mexico, said they could extend a planned day of work stoppages in support of strikers at US subsidiary Asarco.
Group Mexico's labour union in Mexico said 4,000 workers from the company's Cananea, Nacozari and Age Prieta operations will hold rotating work stoppages on August 12 unless progress is made to end the strike at Asarco.
London Metal Exchange three-months copper finished on Thursday's kerb at $3,575 a tonne, down from Wednesday's close at $3,586 a tonne, after setting a new record at $3,596.
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