US copper futures erased losses to close slightly higher on Friday, buoyed by short-covering as probe to the downside failed to attract more selling, traders said. At the Comex division of the New York Mercantile Exchange, benchmark may copper gained 0.25 cent to end at $1.5070 a lb., after trading from $1.4870 to $1.5190. "We closed at a weekly high settlement today.
We're above $1.50 on a weekly settlement, we're above $1.50 for the third consecutive day on a daily settlement and we put in a high of $1.5190 today the high on March 8 was $1.5210, so I'm looking for $1.55 next week on some follow-through strength," said Scott Myers, senior trading analyst at Pioneer Futures.
Spot March copper edged 0.15 cent higher at $1.5075, sitting right under a fresh 16-year and contract high above $1.5230. On a spot continuation level, this would be the best level the contract has seen since 1989.
Deferred, or back month, contracts closed flat to up 0.25 cent on the day. Comex estimated final copper volume hit 20,000 lots, versus 13,143 lots on Thursday.
US copper futures opened lower as some investors sold the market amid a firmer US dollar against the euro, but as the selling dried up, traders covered their short positions and bought into the advance, floor sources said.
"We tested the downside at around the $1.4850-$1.49 level and the market held. I think there is still some steam left in it," one trader said. Traders added that the market was supported by another big drawdown in inventory levels in London.
London Metal Exchange coppers warehouse inventories slid 350 tonnes to 48,750 tonnes on Friday. Comex stocks were flat at 45,395 short tons on Thursday's daily data. Investors turned a blind eye to a firmer US dollar against the euro on Friday, ahead of next week's US central bank meeting, where a quarter-point rise in US interest rates was expected.
In afternoon trade, the dollar, which fell to two-month lows against the euro last week, was trading around $1.3308 per euro on Friday. A firmer dollar tends to make dollar-denominated assets like copper more expensive for overseas investors.
In other news, the International Copper Study Group said on Friday the global world refined copper deficit was expected to be 259,000 tonnes this year, and will drop to 93,000 tonnes next year.
"Higher refinery capacity utilisation levels, combined with the projected slower growth of refined usage in 2005, results in a lower projected deficit," the ICSG said in a statement following a meeting in Lisbon.
In 2004, the shortfall was 719,000 tonnes. LME three-month copper rebounded to end up on the day, settling at $3,292 a tonne, up $27 from Thursday's kerb close.