US copper ends with modest gains

The COMEX copper futures eked out modest gains in range-bound trade on Thursday as the market looked to consolidate recent gains since the start of the month, sources said.
"I think there is a reluctance to try to sell copper. Based on the fact that we have maintained these relatively high price levels after the Federal Open Market Committee (FOMC) announcement at the end of June and the market has really not had a break to the downside since," said David Rinehimer, director of futures research at Citigroup Global Markets.
Benchmark September copper edged 1.15 cents higher at the close to $3.6765 a lb on the New York Mercantile Exchange's COMEX division, after dealing in a tight $3.6145 to $3.6880 trading band.
Initial resistance was pegged at the Wednesday high at $3.77, while first support was seen at $3.60, followed by $3.50.
Spot July closed 1.65 cents firmer at $3.7915, near the upper end of its $3.73-$3.7970 range. COMEX final copper volume was estimated at 10,000 lots, against the 11,674 lots recorded on Wednesday.
Analysts cited cautious trading conditions amid increasing turmoil in the Middle East after Israel blockaded Lebanese ports and struck Beirut airport and two military airbases on Thursday, expanding reprisals that have killed 55 civilians in Lebanon since Hizbollah captured two Israeli soldiers a day earlier.
"It is the geopolitics that should worry the bulls at this stage, as the risks of expanding conflict in the Middle East could send equity markets reeling, thus making it harder for metals to resume the push higher," said Edward Meir, metals analyst with Man Financial.
Fundamentally, overall tight market conditions continue to be reflected in critically low stock levels, supply/demand imbalances, and growing concerns over labour negotiations between union workers and BHP Billiton's Escondida copper mine in Chile. "The bottom line is that there is no indication that the current tight supply situation is going to ease any time soon and that makes the market extremely sensitive to any potential supply disruptions," Rinehimer said.
The union at Escondida, the world's biggest copper mine, said early in the week that there had been no progress in talks with the company to negotiate a new contract to replace one that expires in early August.