New York copper futures finished with strong gains on Thursday on indications of bullish demand for the red metal portrayed by a string of robust US economic reports, traders said.
The dollar's declines, despite the improved economic readings, also helped bolster copper prices in the overseas market which lifts Comex copper in the arbitrage market.
"You're getting periodic pullbacks in copper, but if you look at the big picture, we're in the slow season. So, seasonally we're expecting to build some stocks.
Over the big picture we're still tight, and the global macro picture is still very strong," said a New York bank dealer. At the New York Mercantile Exchange's Comex division, benchmark September copper firmed 1.25 cents to end at $1.6470 a lb., and set a range between $1.6150 and $1.6490.
Spot August copper closed up 1.90 cents to $1.7060 a lb., and traded up to $1.7070. August set an all-time high of 1.7090 a week ago, driven largely by steep drops in stocks.
On Thursday, copper prices fell at the open in response to a huge injection of copper at LME warehouses. LME inventories surged by whopping 5,800 tonnes to 49,800 tonnes and follows several other large additions recently.
Comex warehouse stocks were down 375 short tons at 8,979 short tons on Wednesday.
Traders pointed out that the domain of players ready to sell high inventory levels remains limited and bulls have been able to maintain the upper hand with the price action.
While LME stocks have nearly doubled in two weeks, they remain at around one day's worth of global consumption. Support held the downside and a raft of US economic news that pointed to bullish demand helped turn copper higher.
For example, US retail sales surged 1.8 percent last month as buyer incentives led to the biggest gain in auto sales since just after the September 11, 2001, attacks, when carmakers put in place zero percent financing deals.
July's sales jump followed a similar healthy 1.7-percent rise in June. Auto sales shot up 6.7 percent, their sharpest rise since October 2001, as Ford and DaimlerChrysler joined General Motors in extending employee discounts to all consumers. Weekly US jobless claims fell to 308,000, more than forecast, from 314,000 in the prior week. And US June business inventories were unchanged, but the inventory-to-sales ratio came in at a record low of 1.29 months' worth of goods at the current sales pace.
On the supply side, copper mining giant Group Mexico said its US copper miner Asarco filed for bankruptcy protection due partly to five-week-long labour strikes in Arizona and Texas that has curtailed production. Comex estimated final volume at heavy 22,000 lots, similar to the 20,255-lot tally on Wednesday. Open interest was down by 1,549 lots at 111,890 on Wednesday.
LME three-month copper had slipped to $3,530 a tonne by the on Thursday close, down from $3,540 a tonne on Wednesday. The range ran from $3,500 to $3,557 a tonne.
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