US copper futures finished on Wednesday with sizeable gains, reversing steep losses of a day to set an all-time peak as players rushed to cover short positions before the holiday weekend, traders said.
"After going down six cents yesterday you'd expect the market to rebound a little bit and that's what we saw today. It wasn't dramatic until the last half-hour and then the nearby and December got excessive on the upside.
I got the impression people were just looking to get out," a desk broker said. Traders said going home for the four-day holiday weekend with shorts uncovered in a rising market seemed too dangerous for some given copper's recent increased trading volatility.
The Comex copper market will be closed on Thursday and Friday for the US Thanksgiving holiday. Spot November surged 6.00 cents to a record-breaking high at $2.14 a lb. where it settled.
Benchmark December futures on the Comex division of the New York Mercantile Exchange jumped 5.10 cents to close at $1.9685 a lb., below the $1.97 high.
It slid to a low at $1.8940. It rose to a contract peak at $1.9890 on Monday. March copper gained 1.35 cents to end at $1.8610 a lb., reversing losses to $1.82 a lb.
Comex estimated final volume at 30,000 lots, with 4,852 devoted to switches, after a heavy tally of 41,754 on Tuesday. In a sudden surge, spot copper flew to an all-time high after follow-through selling as nervous longs took profits and got out of positions on Tuesday's selling spree.
"They'd obviously gone short. They were looking for the market to continue going down today and it didn't. So then they just covered on the close.
And they covered whatever they had open even if it was a December short," the broker added. Traders said they thought the magnitude of the move was probably excessive as some players scrambled to cover.
"It certainly rebounded and then some.
I think it went a little overboard. But I think people are still worried about current low stock levels, or lack thereof. It's not going to go away," said one trader.
He noted that European and US warehouse stocks were at extreme lows.
LME three-month copper finished on Wednesday at $4,090 per tonne down from Tuesday's close at $4,112, but well below its all-time high hit on Friday at $4,243 per tonne.
Comments
Comments are closed.