US copper futures ended with slight losses on Monday as illiquid trading conditions and a lack of underlying support allowed the market to extend its new year downtrend, traders said.
"We're still not seeing the participation needed to reverse this trend. The feeling is still out there that this thing can go lower, so nobody is stepping in and buying it at the moment. I looks to me like more of a waiting game to see how far it goes before the interest returns," said one Comex floor dealer.
Copper for March delivery settled down 0.65 cent at $2.4165 a lb on the New York Mercantile Exchange's Comex division, closer to the bottom of its session range between $2.4050 and $2.4535.
On Friday, the benchmark March copper contract closed at its lowest level in 10 months as broad-based liquidation pressure weighed on the base metals complex, with additional pressure stemming from reports of large losses at a London-based hedge fund.
On the downside, technicians eyed first support at the Friday low at $2.3850, followed by $2.3390, a level not seen since last February. Spot February copper lost 0.55 cent to finish at $2.4045 a lb, ad the rest of the board closed with losses ranging between 0.45 cent and 0.95 cent.
Final estimated futures volume was said to be only 5,000 lots, compared with the 18,863 lots recorded on Friday. As of February 2, open interest in Comex copper futures jumped 2,850 lots to 74,680 lots. Copper futures in New York followed their opening call of up 1.20 cents as bargain buying was seen moving in following last week's broad sell-off and on the back of a fairly sizable drawdown in London Metal Exchange-monitored warehouse stocks.
LME copper warehouse inventories fell by 1,225 tonnes to 214,025 tonnes on Monday, while Comex stocks were unchanged at 36,169 short tons on Friday. The London stock decline seemed to offset news over the weekend that workers at BHP Billiton's Cerro Colorado copper mine in northern Chile accepted a contract offer from management and called off a planned strike.
In currencies, the dollar traded higher against the euro on Monday after economic data showed a faster pace of growth in the US service sector for the month of January. The Institute for Supply Management showed its services index rose to 59.0 in January from 56.7 in December. A number above 50 indicates growth in the sector. LME three-months copper settled up $10 at $5,340 a tonne, after erasing 4.8 percent of its value on Friday.
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