London Metal Exchange copper prices ended slightly down after moving in a $70 range on Wednesday, as lack of fund activity left the market uncertain of direction, dealers said. Investors were reluctant to aggressively sell the market after strongly rebounding on Monday from a sell-off last week.
"The market dropped below $3,900 at one stage but it quickly found support and then consolidated between $3,900 and $3,950," a dealer said.
"People are uncertain as to what the funds will do next as they have been driving the market recently. People didn't want to liquidate only for the funds to push it back up, particularly as the market typically advances ahead of LME week."
The annual LME convention begins in London at the end of the month.
Three-months copper ended at $3,933 a tonne, down $22 against Tuesday's kerb close, a day when it hit a new all-time high of $3,987.25.
Analysts said that until LME warehouse stocks increase substantially, copper would continue to attract fund buying.
LME stocks fell 1,075 to 63,050 tonnes on Wednesday and have now dropped by around 25 percent from 11-month highs last month.
"Although it is tempting to give the bulls the benefit of the doubt, increased volatility does suggest some shift in stance, and it would not be too surprising to see more profit-taking, particularly as financial markets seem to be more cautious about the economic outlook," William Adams of BaseMetals.com said in a note.
A potential sign the market may be peaking came from the world's largest copper producer, Chile's Codelco, which cut the premium it charges on shipments from last year's record levels. But it only cut premiums for East Asia and Europe for 2006 by $8-10 a tonne, which could anger industrial users already struggling with booming world prices.
Mining equities were among the day's biggest losers in London on Britain's FTSE 100 index, with Rio Tinto and Anglo American rattled by a profit warning from Australian miner Newcrest Mining and fresh worries that a two-year bull market could come to an end.
"We believe the medium-to-long-term outlook for commodity prices is good," ABN-Amro said in a quarterly report released on Wednesday.
"But the current exceptional prices are just that - exceptional - and we see signs that some base metals in particular are ready to descend."
Aluminium eased $8 to $1,980, while zinc was $10 down at $1,505.
Tin was at $6,375 from $6,400, while nickel lost $225 to $12,125. Lead was at $974 from $986.