US copper futures ended with moderate losses on Wednesday as nervous bears pulled the red metal lower in thin late selling after the spot price set a new historic peak, traders said.
While news of a worker strike at a major Mexican copper smelter propped prices up and kept them supported, some traders said the lack of liquidity in the market allowed bears to sway prices into negative regions.
"I think part of it is the lack of liquidity. We wiped a lot out when we dropped 12 cents last week, and there are a lot of people on the sidelines.
We rebounded, but we're all over the place," said one copper dealer.
At the Comex division of the New York Mercantile Exchange, copper for December delivery was down 0.65 cent by the end at $1.8180 a lb., after pushing up to a high at $1.8450 a lb.
Last on Thursday, December copper set a contract peak at $1.8580. Spot October set a new high at $1.9890 a lb., and finished with 0.35 cent gains at $1.9680 a lb.
Comex estimated final copper volume at 20,000 lots, nearly double the 10,816 lots traded on Tuesday.
With volatility accelerating as the end of the month approaches and options expiring next week in London, a tug-of-war has been ensuing between copper bulls and bears.
"It's very difficult to predict where this thing is going in the short term, and in the long term it remains a bull market. When you're pushing $2 (a lb.) on spot (Comex copper) and $1.85 on December, it's clearly a bull market.
The $64,000 question is whether we are putting in a top," a trader said. Copper rallied for much of the day, after news late on Tuesday that about 1,000 workers walked off the job at a major Group Mexico copper smelter and refinery.
Workers at the Nacozari plant, which principally serves the company's giant La Cardiac mine, struck as a last resort in a long-running dispute about a profit-sharing scheme.
A company official at Group Mexico said the La Cardiac mine itself was unaffected, but was analysing the strike's impact. Also supporting prices was another drawdown in copper inventories.
LME copper warehouse stocks were down 1,975 tonnes at 62,825 tonnes on Wednesday. Comex copper inventories were unchanged again on Tuesday at 3,690 short tons.
London three-month copper closed lower at $3,914 a tonne, down from Tuesday's finish at $3,945 a tonne. On Wednesday's range spanned $3,925 to $3,988 a tonne.
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