US copper futures finished with healthy gains on Monday, as some funds continued the buying trend of last week, although most participants sat on the sidelines after last week's steep run-up to record levels, traders said.
"It was pretty light today. It was just the same pattern with some people trying to sell in the morning. But I think there is a lot of new money coming into these (base metals) markets.
It's eagerly bought by the funds," a dealer said. Fundamentally, he and others said, nothing has changed. Supplies are tight and the economy is roaring ahead. "That's why (LME) copper is at $4,400 (a tonne)," he said.
Benchmark March futures at the Comex division of the New York Mercantile Exchange ended 2.65 cents higher at $2.0075 a lb., after slipping to $1.97.
The session high was $2.0080, after setting a contract high at $2.03 on Friday. After last week's steep run-up to a series of record highs, some traders had anticipated a round of profit taking that never materialised.
December tends to be a quiet month, with many players winding down their trades and closing out their books for the year. But, one trader said he thought this year may be more active with some large players still holding short positions in a market that has setting successive record highs.
"I think it's going to be an active December. There a few people caught short on the base metals and I think it's going to be firm until the end of the year. Fundamentals are still bullish and I think it's going to be very stressful for the dominant shorts still in the market," a trader said.
With volume as thin as they were on Monday, traders said, even small-sized trades were able to exaggerate price moves. Comex estimated final copper volume at paltry 6,000 lots, less than half on Friday's moderate turnover at 13,595 lots.
Lean copper inventories have sent spot prices into steep backwardation to metal for later deliveries.
Spot December copper finished at $2.1660 a lb., up 1.35 cents, well above benchmark March futures prices.
The all-time high was hit on Friday at $2.1940 a lb. London Metal Exchange copper inventories rose 1,625 tonnes on Monday, but remains thin at just 75,275 tonnes. At Friday's count, Comex inventories were unchanged at 3,681 short tons and have remained so since mid-October.
With exchange warehouse stocks at historically low levels and none of it budging, one trader said, and the red metal was obviously in tight hands.
Recent strong US economic data have inspired funds and other long-term investors to renew their interest in copper; an industrial metal used in wiring and tubing.