US copper futures settled near their session lows in moderate business on Tuesday as push to the upside faltered following London copper's failure to hold record levels, sources said.
"I think everyone got long on, figuring it was going to be another day like yesterday where it was going to run up another three or four cents and like as always, everyone gets long at the highs and they're the first guys that end up bailing out of it," said one Comex floor broker.
"I think when London started tracing back through $5,150 (a tonne) they just decided to call it quits and pocketed some profits," he added. The benchmark May copper contract ended the day down 1.00 cent at $2.3240 a lb, on the New York Mercantile Exchange's Comex division, just off the bottom of its $2.3230-$2.3750 trading band.
On Monday, Comex may copper set a life-of-contract high at $2.40 a lb in electronic ACCESS trade. Resistance in May copper was pegged at $2.37 to $2.38 (a lb), with support saw $2.2725. Spot March lost 1.00 cent, ending at $2.3340, while the rest of the board closed with losses ranging from 0.55 to 1.10 cents.
Based on a spot continuation basis, Comex copper hit an all-time record at $2.4050 in electronic trade on Monday. Comex final copper volume was estimated at 12,000 lots, down from Monday's official count at 13,680 lots.
A dearth of market-moving news and low trading volumes seemed to make copper's recent rally look a lot better than it actually was, one trader noted. "Ultimately, it was more driven by volatility than it was liquidity.
I think everyone has kind of had their fill of fast-moving markets and are probably staying out of it, so unfortunately that creates more volatility, he said." In London, copper and zinc surged to new record levels on renewed speculative buying, but the red metal could not keep pace with the rally in zinc and sold off in the afternoon.
Three months copper futures on the London Metal Exchange (LME) closed flat on the day at $5,105 a tonne, well off the all-time high at $5,186, hit in electronic trade. Zinc closed open outcry trade on the LME at a new peak at $2,510 a tonne, up 1.6 percent from Monday's settlement.
"Although prices are still strong overall, the market does seem to be struggling and with oil and gold, the two benchmark commodities, heading south again and with the dollar recovering, it would not be surprising to see the base metals head lower too," said William Adams of BaseMetals.com.