Copper futures edged lower on Monday as concerns over supplies eased after the end of a strike at producer Grupo Mexico last week, which spurred sporadic selling based on deteriorating technical sentiment.
Falls in key three-month London Metal Exchange copper capped copper futures in Shanghai, although a wait-and-see mood was dominant as traders were hesitant to take fresh buy positions due to a lack of new factors.
"We've seen a lot of buying from end-users and funds on price dips, but the market lacks energy to chase above $5,000 now," said Naohiro Namura, a vice president of derivative products division at Mizuho Corporate Bank in Tokyo.
Namura said LME copper could be capped ahead of the end of the first quarter as fund operators were expected to be keener about squaring off their positions on rises. As the market lacked new fundamentals incentives, traders were relying on technical factors for direction.
The key LME copper contract was trading at $4,935/4,945 per tonne, down 0.5 percent from Friday's London kerb close of $4,960. The market had seen heavy bargain hunting by end-users when the contract fell to the 50-day moving average of around $4,650 early last week.
But three-month LME copper failed to rally above closely watched resistance of $5,000. After seeing the copper being capped below $5,000 in the last three sessions, the key contract is more likely to edge down towards the 7-, 14- and 30-day moving averages placed between $4,862 and $4,879 in the near term, traders said.
Copper futures lost momentum on Friday after the end of the strike at producer Grupo Mexico at two massive copper mines. The strike began on February 28 in support of the beleaguered boss of Mexico's mine union, Napoleon Comex, who faces a leadership challenge and government accusation of corruption.
In Shanghai, the most active May copper futures inched up to close at 46,710 yuan from Friday's close of 46,700. On Friday, weekly copper stocks in warehouses monitored by the Shanghai Futures Exchange dived for the second straight week as traders cited slower imports this year and more exports from China's State Reserves Bureau.
"Shanghai market is mainly tracking moves in the LME prices," said a trader at a Japanese trading house. "Falls in inventories were not surprising. They weren't fuelling views about overall shortage in copper supplies."
Key three-month LME aluminium dropped to $2,467/2,472 per tonne from $2,488 at the London kerb close on Friday. The most active May Shanghai aluminium contract closed at 19,680 yuan, up 0.6 percent from Friday's close of 19,570 yuan.
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