US copper futures ended with strong gains on Tuesday, reversing sharp losses of a day, and traders said buyers from across the spectrum viewed on Monday's declines as buying opportunities.
With large short copper position still open and low levels of inventories at consumers, some analysts said they thought any drop in prices would be viewed similarly until year-end.
On Monday, copper-ended 2 percent lower on profit taking, with some participants, nervous at stratospheric price levels and thin volumes, deciding to sell. "The market wasn't overly surprised when it went down yesterday.
Everyone knew it was going to happen eventually. Regardless, the market came right back again. And, if you didn't buy anything, shame on you," a dealer said. Benchmark March futures at the Comex division of the New York Mercantile Exchange jumped 4.05 cents to close at $2.0265 a lb., after posting a session high at $2.0360.
It set a contract high at $2.0460 on Monday before its steep decline. Spot December copper charged up to a new record at $2.1990 a lb. and settled 1.75 cents higher at $2.1730 a lb. Comex estimated final copper volume at 11,000 contracts, similar to 10,709 lots traded on Monday.
Traders said fundamentals and the low stock situation have not changed, so there was little reason to continue selling copper on Tuesday. "There was a reason for the market to correct, but there wasn't a reason for it to keep heading south," a trader said.
After the market closed, as widely anticipated, the Federal Reserve increased its target for overnight rates for a 13th consecutive time by 1/4 point to 4.25 percent.
But, the policy-setting committee also dropped references to an accommodative or simulative policy.
The Fed also repeated an expectation that it would likely need to lift rates at a "measured" pace to keep inflation at bay.
While analysts said the Fed.'s statement suggested a "steady as she goes" policy, the major hinging point remains energy prices which can have a dramatic effect on spending patterns.
Unionised cargo workers at FCAB have been on strike since last on Wednesday after failing to reach a new salary deal. LME warehouse stocks rose 100 tonnes to 74,300 tonnes on Tuesday. Comex inventories were still unchanged at 3,681 short tons on Monday.
London Metal Exchange three-months copper closed at $4,451 a tonne, from $4,372 at Monday's close.