US copper sharply lower

US copper futures closed on Thursday at their lowest level since April amid speculative liquidation sparked by concerns of a possible oversupply situation in China, the world's top consumer of the industrial metal, analysts said.
A 17 percent rise in refined copper production during the month of April and a 26 percent build in copper stocks monitored by the Shanghai Futures Exchange last week were seen fanning fears that Chinese imports of the metal would slow in the second half of the year.
"China is really running this market," Steve Platt, an analyst with Archer Financial Services in Chicago, said, adding that the rebuilding of inventory levels in Shanghai was a "bearish development" for the market.
Copper for July delivery on the New York Mercantile Exchange's Comex division ended down 11.60 cents, or 3.4 percent, at $3.3065 a lb., its cheapest price since April 3, after trading between $3.2285 and $3.44.
Following the recent price breakdown, chartists now eyed the $3.00 to $2.90 areas as copper's next support level, basis July. Spot May copper fell 11.50 cents to $3.3090, while back months ended down 7.95 to 11.50 cents.
Final futures volume was estimated at healthy 19,169 lots, against on Wednesday's official count of 14,396 lots. As of May 16, open interest in copper futures dropped 1,285 lots to 80,560 contracts. Traders will now focus on China's weekly stock data due on Friday, which may empower the bears if inventories continue their ascent.
"Tomorrow, the Shanghai exchanges will release stock figures, and there is some apprehension that copper inventories, in particular, will be quite high," noted Edward Emir, metals analyst with Man Financial.
Meanwhile, the International Copper Study Group said world copper supply was likely to exceed demand by 280,000 tonnes in 2007. The Lisbon-based group predicted global refined copper production in 2007 would rise 4.3 percent to 18.07 million tonnes, while world demand would rise 4.7 percent to 17.80 million.
The recent strength in the dollar was seen weighing on the metals markets on Thursday, following solid US economic data that backed the view that interest rates will likely stay on hold.
An unexpectedly large rise in the Philadelphia Federal Reserve's business activity index for May followed data showing that initial filings for US state unemployment insurance aid fell for the fifth straight week. In afternoon trade in New York, the euro was down 0.2 percent at $1.3495. A stronger US currency makes dollar-priced metals less attractive to non-US investors.
London Metal Exchange copper for delivery in three months touched $7,095 a tonne, its lowest since April 3, before settling at $7,251, down 4.7 percent, or $359, from Wednesday's close. LME copper stocks rose 1,600 tonnes to 142,700 tonnes on Thursday, while Comex stocks were unchanged at 31,379 short tons on Wednesday.