US copper futures dipped more than 1 percent on Thursday in mostly technical business after prices failed to breach key chart points reached in the day, traders and analysts said.
"The $3.66 was a major resistance level. We had to get through that level and we didn't. I still think we're going higher this is just pure profit-taking," said Scott Myers, senior-trading analyst with Pioneer Futures in New York.
Copper for September delivery settled with a loss of 4.05 cents at $3.5810 a lb at the New York Mercantile Exchange's Comex division, near the bottom half of its $3.565 to $3.66 trading bands.
Larry Young, senior trader at Infinity Brokerage Services in Chicago, said the market's inability to crack the $3.66 resistance prompted some light liquidation, which intensified once sell-stop orders were triggered at the $3.5770 level. Final estimated futures volume totalled 12,876 lots, against on Wednesday's tally of 9,871 lots. Open interest in Comex copper futures rose 528 lots to 88,066 contracts as of July 11.
Despite the profit-taking pullback on Thursday, analysts believed the markets tight underlying fundamentals would continue to drive prices higher. Unresolved strike action in Chile continued to be seen as a main catalyst behind the market's latest rally as worries mounted over reduced output at a time when stockpiles in London copper warehouses neared their lowest levels in a year.
London Metal Exchange-monitored copper inventories declined 725 tonnes on Thursday to 98,625 tonne two days worth of world consumption. Comex stocks fell 112 short tons to 21,877 short tons on Wednesday.
All eyes will be on Friday's weekly Shanghai stock data for any surprises. Analysts expect a 10,000-tonne increase. "Unless there is a major surprise here, this impact should be relatively short-lived, as the focus will remain on the more important decline in LME stocks and the strike activity still swirling around the complex," said Edward Emir, metals analyst with Man Financial.
Chilean copper giant Codelco said operations at its Andina division in central Chile would remain suspended until at least on Thursday afternoon due to protests linked to a strike by subcontracted workers.
Codelco said on Wednesday it had lost 700 tonnes of copper output per day since on Monday, and that the strike had cost Andina $25 million in lost copper sales since the subcontractors' stoppage began on June 25.
Elsewhere in Chile, the union president at the Collahuasi copper mine, where workers have been on strike since on Monday, said only a few minor points needed to be agreed on with management to end the stoppage, although the two sides had no plans to talk again for now.
In Zambia, workers at the Kansanshi copper mine, a unit of Canada's First Quantum Minerals, have gone on strike in a dispute over pay. Looking ahead, prices of most industrial metals will fall from current levels as supply increases this year and next, but they will still be much higher than previously forecast, a Reuters poll showed on Wednesday.
London Metal Exchange copper for delivery in three months traded as high as $7,990 a tonne, slightly below on Monday's two-month high of $8,015, before falling back to $7,826 by the close.
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