US copper futures prices declined on Tuesday in a small round of profit-taking as the dollar strengthened against the euro, then fell further after US consumer confidence came in slightly above forecasts, traders said. Copper was underpinned, however, by expanding copper mine strikes in Chile and expectations that the Federal Reserve will cut key US interest rates on Wednesday.
Now-active July copper dropped 4.00 cents or 1.02 percent to $3.8890 per lb on the Comex metals division of the New York Mercantile Exchange. It traded in a lower range between $3.8510 and $3.93.
Comex estimated 10:00 am EDT volume for copper at 10,218 lots, against Friday's 17,923 lots. Open interest for copper futures fell 16 lots to 106,084 by the close of April 25. A US consumer confidence reading that was slightly above forecasts helped the dollar extend its gains against the euro and pushed copper lower. A firmer dollar increases the cost of dollar-denominated assets like copper for overseas investors.
Moreover, confidence slipped to a five-year low in April as consumers faced a grim job market, the report said, dampening the mood among copper traders. Analysts said the confidence data reflect a rise in food and fuel prices, and will probably remain around current levels for awhile. Other economists pointed out that often consumers continue spending despite a drop in confidence.
Chilean copper giant Codelco again halted work at Teniente, its largest underground copper mine, due to strike violence that has kept smaller Andina and Salvador divisions shut for 14 days. The Federal Reserve is widely expected to trim its target for the overnight US interest rate by 25 basis points to 2.00 percent at its policy-setting meeting on Wednesday. Lower US interest rates tend to weaken the dollar against currencies of major trading partners.
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