Copper futures in New York ended near their session lows on Wednesday, back-pedalling from three-week highs reached the previous session. The lack of underlying fund support allowed locals to push the lower end of the day's range, floor dealers said. "I really believe a lot of the funds have closed their books for the year.
I believe people had a great year in the metals and with bonuses coming up, why screw it up?" said one long-time trader down on the floor of the New York Mercantile Exchange's Comex division.
Copper for March delivery settled down 8.70 cents, or 2.7 percent, at $3.16 a lb, just off the bottom end of its $3.1550-$3.2460 trading range. On Tuesday, March copper hit a session high at $3.2950 its priciest level since November 10.
First resistance in March copper was seen at the contract's 50-day moving average, just below the $3.30 a lb level, followed by $3.40, while underlying support was pegged at the November 17 low at $3.10, and then at the psychological $3.00 level.
Spot December tumbled 8.55 cents to its session trough at $3.1490. Back months ended in the red, from down 6.00 to 8.70 cents. Floor dealers said final estimated Comex copper volume reached only 5,000 lots, against the 12,054 lots recorded on Tuesday.
This week's debut of the side-by-side screen-based electronic trading platform was not seen as the reason for Wednesday's moderate business, they said. "So far, over the last three days the electronic has done about a third of copper's volume down here on the floor, but I don't think that is why we're quiet.
I just think business is winding down as year-end approaches," one said. The failure of London December Three-Month aluminium options to reach their $3,000 a tonne strike price ahead of expiry on Wednesday prompted the widespread selling in the base metals complex on Wednesday.
These contracts nearly 10,000 have been under the spotlight in recent days and traders had expected the holder to try and ramp up the price of aluminium futures to bring it nearer to the strike price.
"I think the market was a little disappointed with all the talk of the aluminium options expiration. The market got a little long in front of all of it, and when nothing happened and it fizzled out, we just sold off from there," said one market analyst. On the fundamental front, possible production problems stemming from the start-up of contract negotiations at Chile's Codelco Norte were seen underpinning prices in the near-term.
More than 6,000 workers started talks on Tuesday with the company and the leaders of at least half of them say the sides have a long way to go to avoid a strike.
Codelco Norte, the largest division at Chile's state-run Codelco, and workers at three unions, have until December 31 to negotiate a new three-year contract or face a strike in January. Meanwhile, union workers at Chile's Altonorte copper smelter, owned by Strata Plc, are expected to reject a new wage deal from the company this weekend and strike, union president Iced Canberra told Reuters.
Overnight inventory data showed London Metal Exchange warehouse stocks rose 475 tonnes to 161,375 tonnes on Wednesday, while Comex stocks rose 302 short tons to 32,201 tons on Tuesday. LME three months copper ended down $185, or 2.6 percent, at $6,990 a tonne from Tuesday's kerb close.
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