US copper futures dipped more than 1 percent in early business on Tuesday as the market paused from its recent bout of strength, allowing participants to lock in some profits, traders said. "We had such a good day yesterday, and we opened up today and took out yesterday's high, so I think it is just building a base," said Larry Young, senior trader at Infinity Brokerage Services in Chicago.
"We have definitely turned a corner. We need to clear $3.50 (a lb). We hit it today, but we just need to close above it and I think it will just propel itself continually higher," Young added.
Copper for July delivery was off 2.45 cents at $3.4435 a lb by 10:29 am EDT (1429 GMT) on the New York Mercantile Exchange's COMEX division, moving in a relatively tight morning range between $3.42 and $3.50. On Monday, US copper futures closed at a 2-1/2-week high as traders shrugged off a collapse in Chinese equity markets and focused on the red metal's sound fundamentals.
A downtrend in global copper inventories and ongoing supply constraints have been the basis for the latest upside interest, analysts said. "Global copper stocks remain low and supply problems will feed straight through to higher prices," said Robin Bhar, metals analyst with investment bank UBS. Technicals were also at play on Monday, traders said, aiding in the market's surge higher. "We did have a strong buy signal at $3.4280. We were really focused on that number and, once we violated it, we knew we were going to continue higher," Young said.
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