US copper futures ended down Friday in a mild pullback from a new 4-1/2-month peak as investors cashed in on an 8 percent weekly rally, with a jump in inventories and a rebounding dollar slowing the recent momentum. Copper for May delivery ended down 1.15 cents at $1.7960 a lb on the New York Mercantile Exchanges COMEX division.
Session range from $1.7870 to $1.8530, a high dating back to November 10. Larry Young, senior trader at Infinity Futures Inc in Chicago, cited investor profit-taking at weeks end. Next upside target at psychological $2.00 a lb, while initial support eyed at $1.75 - Young.
COMEX estimated electronic futures volume at 9,700 lots by 12 pm EDT (1600 GMT). Final volume on Thursday reached 16,190 lots. Open interest went up 3,200 lots to 96,969 contracts open as of March 19. Pat Donnelly, senior broker with Peak Trading Group in Chicago, said the copper market was taking a breather due to a recovery in the US dollar.
Commodities as a whole could catch a further bid next week if the dollar continues to sell off on the back of a higher inflation outlook - Donnelly. The dollar rebounded broadly on Friday after a two-day sell off tied to the US Federal Reserves plan to buy Treasury debt. The Feds aggressive move powered commodity markets higher on Thursday, with a decision to buy $300 billion of longer-term government debt stoking inflationary fears.
Euro zone industrial output fell 3.5 percent in January against December for a 17.3 percent annual drop - the deepest decline since records began in 1990. London Metal Exchange copper warehouse stocks surged 10,500 tonnes on Friday, bringing total inventory levels to 503,950 tonnes. Canceled warrants material earmarked for delivery rose to 24,525 tonnes from 22,650 tonnes on Thursday.
Jump in LME stockpiles offset by weekly decline in Shanghai warehouses - Meir. Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 10 percent to 31,408 tonnes from 34,735 tonnes a week ago. Budding optimism about the recovery in Chinas real demand for industrial metals may prove premature, despite a batch of strong indicators, as stimulus measures take time to revive the sector.
Global copper market in a surplus of 363,000 tonnes in 2008, compared with a surplus of 286,000 tonnes in 2007 - The International Copper Study Group (ICSG). Chilean stater copper giant Codelco and global miner Anglo American Plc are seeking synergies between their Los Bronces and Andina copper mines, rich back-to-back deposits along the Andes mountain range in central Chile. LME copper for three-months delivery ended down $44 at $3,955 a tonne. Earlier, it surged to a fresh 4-1/2-month peak at $4,075.
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