US copper futures ended lower on Wednesday as the industrial metal fell under the weight of a stronger US dollar and the steeper losses sustained in the precious metals and energy complexes, analysts said. "I think you can attribute this sell-off today to the complex as a whole," said David Meger, metals analyst with Alaron Trading in Chicago.
"Significant weakness across the board in the metals once again today." Copper for March delivery settled down 6.90 cents or 2.1 percent to settle at $3.1725 per lb on the New York Mercantile Exchange's Comex division, after dealing between $3.1470 and $3.2335.
By 1 pm EST (1800 GMT), futures volume was estimated at 12,399 lots. On Tuesday, final volume totalled 17,953 lots. Open interest in Comex copper futures surged 3,835 lots to 83,849 contracts as of January 15. Dollar-denominated copper prices fell in line with the euro, which plunged after a European Central Bank official told Bloomberg News the central bank may revise down its euro zone growth forecasts for 2008.
After the comments, the euro slumped to a session low of $1.4596. It last traded down 1 percent to $1.4653. The dollar had struggled as data showing relatively modest US inflation kept alive expectations the Federal Reserve will cut interest rates to rescue a flagging economy. The Labour Department said on Wednesday its Consumer Price Index rose 0.3 percent in December, less than half November's 0.8 percent jump.
The CPI rose 4.1 percent, well ahead of 2006's 2.5 percent gain and the steepest since 1990. The data "underlines our view that we're on the razor's edge here, that we could be headed into recession," said Mike Schenk, senior economist with Credit Union National Association in Madison, Wisconsin.
Separately, the Federal Reserve said that output by the nation's mines, factories and utilities was flat in December and for the full year 2007 posted its weakest gain since 2003. Frank Lesh, broker and futures analyst with Future Path Trading in Chicago, believed the fact that the industrial production numbers failed to surprise to the downside offered some mild support.
"Nowadays, you just look to see how bad is it going to be, and when it's not as bad as expected, that's good," Lesh said. On the labour front, Mexico's mining union said on Wednesday that 25,000 members were on an eight-hour strike, but Grupo Mexico, embroiled in a conflict with the union, said its key Cananea copper mine was open and unaffected.
Union official Carlos Pavon told Reuters the workers were on a one-day walkout in support of a five-month strike at Cananea that was declared illegal last week. London Metal Exchange (LME) coppers for delivery in three months was last indicated at $6,990/7,000 a tonne, down 2.4 percent from Tuesday's close of $7,160. LME copper stocks were down 3,050 tonnes at 191,050 tonnes on Wednesday, while Comex copper stocks declined 99 short tons to 14,078 short tons on Tuesday.
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