US copper futures closed down for the third consecutive day on Thursday as recent weakness in global equity markets sparked fears that a cooling in the global economic expansion could crimp demand for the industrial metal, traders and analysts said.
"Copper is really indicative of economic activity and because it is so dependent on above-ground stocks, the draws and the ebbs and flows of liquidity will be reflected very fast," said Frank McGhee, head precious metals trader with Integrated Brokerage Services LLC in Chicago.
"If you get the overall expansion starting to cool or somebody trying to put the brakes on it, which a significant correction in the Chinese stock market would do, then you could begin to see the (copper) stockpiles start building again," McGhee said.
Copper for July delivery settled down 2.70 cents to $3.3770 a lb. on the New York Mercantile Exchange's Comex division, after trading a session range between $3.3485 and $3.4125.
Support in July copper was seen at $3.30, followed by $3.26, and then at the May lows at around $3.17. Resistance was pegged at $3.50. Final estimated copper futures volumes stood at 20,452 lots, versus the 16,600 lots recorded on Wednesday.
As of June 6, open interest in Comex copper futures fell 291 lots to 80,935 contracts. Overnight inventory data continued to show copper flows leaving exchange-monitored warehouses a sign of good demand.
LME copper warehouse stocks fell 775 tonnes to 122,275 tonnes on Thursday, down nearly 40 percent since February.
Comex stocks eased 89 short tons to 26,591 short tons on Wednesday.
Meanwhile, copper workers in Mexico, who were on their way to walking off the job by June 10, have delayed the strike until June 15, allaying some concerns of a supply disruption at mines and processing plants owned by Group Mexico.
Looking ahead, the company said on Wednesday that it will produce 190,000 tonnes of copper at its new 'El Arco' mine in northern Mexico starting in 2012.
A lack of progress in contract talks at Collahuasi, one of Chile's largest copper mines, offered further support, traders said. The Collahuasi mine produce between 440,000 and 450,000 tonnes of copper per year in cathodes and contained in concentrates.
On the production front, Jiangxi Copper Co Ltd, China's top producer of the red metal, has begun production from a huge new refinery in the country's Southeast, lifting capacity to 700,000 tonnes annually to take advantage of resilient global prices.
LME copper for delivery in three months closed up $15 to $7,435 a tonne from Wednesday's settlement.
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