US copper futures maintained strong gains into the close on Thursday, after rallying to a new 16-year high and an all-time peak for spot copper when concerns about tight supplies combined with short-cover buying to drive the metal through resistance.
At the New York Mercantile Exchange's Comex division, copper for July delivery finished on Thursday with 2.05 cents gains at $1.5695 a lb., but had raced up to a 16-year high at $1.5850 per lb. shortly after the open. Traders said tight supplies drove Comex spot copper up briefly to match the all-time high at $1.65 a lb, a level last seen in November 1988.
Renewed fund buying thrust prices up through resistance levels for only a short while as speculators rushed to take profits at the peaks, but New York dealers said they think the market will be seeing more of the same going forward.
"There's no copper. Ultimately that's what it comes down to. Nobody's delivering copper in June and the month is half over. Stocks keep dropping," said one New York dealer.
"There's no apparent sign of an excess of material out there that can be delivered. There isn't enough copper around," the copper dealer added.
At the London Metal Exchange, copper warehouse inventories fell by 1,000 tonnes to another 31-year low on Thursday, and Comex exchange stocks were down 523 short tons at 17,162 tons.
Though the high-grade contract, which trades on Comex today and began in 1988, surpassed its record on Friday when it ran up to $1.6320 per lb., chartists use $1.65 as the top price since copper began trading in 1972, even though it was a different contract.
Spot June Comex copper finished 3.65 cents higher at $1.6435 a lb. contract out to October all hit new life-of-contract highs. Prices ended up 1.15 to 2.05 cents.
"There were some funds that came in to buy, but there were also stops that pushed us up. We hit resistance at $1.5830 (on the July contract) that triggered stops that sent it on to $1.5850," a copper trader said. Traders said prices came off the highs after US housing data came in short of expectations and the dollar firmed.
"Dollar strength was part of the reason that we couldn't hold the highs. When you're up this high there are always people who want to sell.
There was some forward selling by producers. But I think that's only a drop in the bucket," said a dealer, who thinks there is still ample room to the upside.
Some traders said they thought more stop-loss buy orders were poised at $1.5890 a lb. level for July coppers. For the immediate term, copper's upside was limited as holders of short positions acquired at lower levels were selling them off to cut their losses after the rally.
A drop in the Philadelphia Federal Reserve's business conditions report also briefly tarnished copper's gains.
The June business index dropped to negative 2.2 from 7.3 in May.
Forecasters expected the June index would rise to 10. Within the Philly Fed report, unfilled orders and delivery times were both deeply negative, along with inventories.
Demand side components like shipments, new orders, employees, and prices received all remained strong. London Metal Exchange 3-months copper set a new record at $3,347 per tonne, but settled on Thursday at $3,317, well up from Wednesday's close at $3,296 a tonne. Comex put final copper volume at robust 25,000 lots.