Copper futures ended with steep declines on Wednesday, pressured first by a spike in London copper stocks, then pushed even lower by a sharp drop in US durable goods orders, traders said. Aside from rollover business, which has been winding down, traders said many players remained away for summer vacations or sidelined until September.
"The truth is the volume has not been great all week. I think it's getting bullied a little bit, because a lot of the big players, particularly the funds, just aren't in the market.
I don't think you can read a heck of a lot into the down move," said one New York metals dealer. At the New York Mercantile Exchange's Comex division, September copper lost 2.50 cents to finish at $1.6670 a lb., in a range between $1.66 and $1.6870 a lb.
December, which has assumed the benchmark position with more than twice September's open interest, was down 1.90 cents at $1.6240, in an ending range from $1.6140 to $1.6370 a lb.
Spot August fell 2.75 cents to $1.7170 by the close. The rest settled 1.70 to 3.20 cents lower. Exchange floor brokers said much of the selling on Wednesday came from small funds, with locals buying the dips.
"I think there were some small specs that bailed out of longs today, but I don't think the large longs have done anything. They're just sitting and waiting," a trader said. They also said rolls out of September into December futures was well under way, with the August contract coming off the board on Monday.
Comex estimated final copper volume at 30,000 lots, with rollovers at hefty 6,598 lots.
On Tuesday's volume was about half that amount at 15,062 lots. Open interest fell by 1,443 contracts to 102,608 lots on Tuesday. Another inventory spike in London sparked selling overnight that led to Comex declines at the open.
"The small players were keying off of the usual factors, like the inventory rise and the drop in durable. But I think the rise in stocks was a bigger factor in it all than any of the economic data," the trader added.
London Metal Exchange warehouse inventories increased by 2,250 tonnes to 65,150 tonnes on Wednesday. Comex stocks rose by 197 short tons to 8,776 tons on Tuesday.
Copper fell further after the government said US durable goods orders declined by more than four times forecasts. July orders tumbled 4.9 percent, compared with an upwardly revised 2.8 percent increase in June orders.
Forecasters had called for a July loss of 1.2 percent. An analyst said the orders report was "ugly on the surface, but it follows a great deal of strength.
You see declines across the board, but those declines follow big gains." Even a record pace of US new home sales in July could not offset the damage to copper prices from the durable report. Single-family home sales jumped by 6.5 percent to the highest annual sales rate on record. On the London Metal Exchange, three-month copper ended at $3,590 a tonne and set a range of $3,575 to $3,622.
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