US copper futures slide

US copper futures settled lower for the fourth straight session on Thursday, as investors continued to unwind long positions and move their money into safer havens, dealers said. "The whole complex is down base metals and everything because the hedge funds seem to be liquidating everything," said George Gero, Vice President with RBC Capital Markets Global Futures in New York.
"The moment, it looks like they are putting that money into five percent movies (government bonds), and the safe-haven at five percent is pretty good." Copper for September delivery ended down 3.30 cents, or 0.93 percent, to $3.5225 a lb. on the New York Mercantile Exchange's Comex division, after dealing in a session range between $3.51 and $3.5805. Final estimated futures volumes totalled 17,501 lots, against on Wednesday's official count of 19,403 lots.
As of July 25, open interest in Comex copper futures fell 3,559 lots to 90,937 contracts. Frank McGhee, head precious metals trader with Integrated Brokerage Services LLC in Chicago, believed copper was being buffeted mostly by the sell-off in the European and US equity markets.
"A lot of it depends on what goes on with the US stock market. We have got an easing of rates, but that is a market-driven event, and the question is once this stock sell-off stabilise, will those rates run right back up or is it longer-term parking of funds," McGhee said.
The Dow Jones Industrial Average slipped more than two percent on Thursday on the back of investor risk aversion tied to a worsening environment for financing corporate take-overs and data showing more deterioration in the US housing market.
Copper, used broadly in home construction, lost additional ground after a Commerce Department report showed sales of new US homes fell 6.6 percent in June to an annual rate of 834,000 from a revised rate of 893,000 in May. Thursday's data came a day after another key report showed the pace of existing home sales fell to a four-and-a-half-year low.
Home reseals represent 85 percent of the housing market. Despite the soft housing data, copper continued to find support at around the $3.50 level, as labour disputes continued to play out at Chile's Codelco, the world's largest copper minor. "Copper is holding up fairly well because nobody really knows if the problems in Codelco are over or not," Gero said.
The state-owned company, which supplied 11 percent of the world's copper last year, remained in talks this week with subcontracted workers who have been on strike for a month. Operations at its small Salvador division were still shut due to striking workers picketing and refusing to let staff enter the mine.
Looking ahead, analysts saw emerging market growth taking the lead over the United States and other leading economies, which continue to lag behind. "Longer-term, global metal consumption should continue to be strong on Chinese and developing world growth (regions which also happen to have high propensities to consume metals) and a firm Europe and Japan," Bart Melek, Global Commodity Strategist with BMO Nest Burns in Toronto, said in a note to clients.
Supply-side fundamentals showed London Metal Exchange-monitored warehouse stocks climb 1,800 tonnes to 100,825 on Thursday. "LME stocks have poked above 100,000 tons today, and for the last few days, stocks seem to have been flat-lining around this level.
Whether we resume the stock decline or not will, in our view, be the key determinant of price direction over the short-term," Edward Emir metals analyst with Man Financial, said in a daily market comment. Comex stocks fell 92 short tons to 22,728 on Wednesday. London Metal Exchange copper for delivery in three months settled at $7,760 a tonne, down $18 from Wednesday when the metal fell 2.4 percent on the back of a rebounding dollar.