Comex copper futures settled down and at their lowest level in six weeks on Friday as speculative money continued to exit the market amid a downturn in sentiment and a weak technical picture that could extend losses next week, sources said.
"The short-term trend is clearly down," said Scott Meyers, senior-trading analyst with Pioneer Futures. "We took out some stops and once we got below $3.34 (basis July copper) it also filled a gap to $3.3050 and it's on the negative side of the gap, so this does look weak.
Look for a move maybe to $3.15 as being next support," Meyers added. Copper for July delivery sank 8.95 cents or 2.7 percent to $3.2675 a lb on the New York Mercantile Exchange's (Nymex) Comex division.
This was the lowest settlement for the benchmark contract since April 28. Trading ranged from $3.2415 to $3.47. Spot June ended down 7.90 cents at $3.3730 after trading from $3.36 to $3.55.
The market was termed extremely volatile, with final Comex copper volume estimated at 21,000 lots, in line with Thursday's final count at 20,717 lots. Market sentiment remained depressed amid a resurgent dollar and fears of slowing global economic growth and inflation, which in turn could dampen demand for industrial metals. On Thursday, Copper Development Association Inc reported US copper use fell by 6.2 percent to 7.471 billion lbs. in 2005, down from 7.962 billion lbs. in 2004 when copper consumption increased.
Hawkish comments from Federal Reserve officials this week bolstered the dollar amid market expectations of another US interest rate hike later this month to counter inflationary pressures.
In afternoon trade in New York, the euro was down almost 0.11 percent at $1.2636, after hitting a fresh one-month low at $1.2595. Production cuts and supply constraints were largely ignored this week as traders said the bullish news had already been factored into the market following the parabolic price spike since the start of the year.
"This news is still out there and whether or not it means the market should be at $3.50, I don't know but in my view, it's enough to support the price for the time being," one broker said.
On Thursday, Grupo Mexico, the world's No 3 copper producer, said it would close its strike-hit La Caridad copper mine, which produces about 140,000 tonnes of copper concentrates per year, and also threatened to shut down its huge Cananea copper mine.
Also, the chief executive at Chile's Codelco, the world's largest copper producer, said on Thursday the company sees global copper demand remaining strong through 2007, but current prices were not sustainable in the medium term. Meanwhile, Merrill Lynch raised its 2006 price views for certain metals due to the bullish fundamental backdrop in the metals markets.
London Metal Exchange-monitored warehouse stocks fell by 1,275 tonnes to 111,125 tonnes on Friday, while Comex inventories were down by 75 short tons at 8,951 tons on Thursday's data. The Shanghai Futures Exchange reported copper stocks rose by 5,205 tonnes at 51,535 tonnes this week. London Metal Exchange three-month copper settled the kerb at $7,220 a tonne, down $90 from the previous session's close.