Copper futures in New York settled just above a 19-week low on Thursday, as chart-based selling emerged following the market's failure to garner any upside strength, sources said.
Copper for December delivery ended down 5.35 cents or 1.7 percent at $3.0410 a lb on the New York Mercantile Exchange's Comex division, well within range of the on Monday low at $3.02 the cheapest December copper has been since June 28. Floor dealers noted the market's failure to breach the $3.10 level prompted some short-term longs to exit the market.
"The funds put on a little bit of a short-term long position yesterday on ideas the market looked like it was firming up a bit, and when we were not able to punch through $3.10 in December, they said, 'It's not going to happen today, so let's clean up this little bit of a long position and re-evaluate it,'" said one Comex floor dealer. The now most-active March contract slipped 5.00 cents to settle at $3.0750. Spot November lost 5.15 cents by the close to $3.0360.
Back months finished down 2.05 to 5.00 cents. Comex final copper volume was estimated at 14,000 lots, against the 12,182 lots recorded on Wednesday.
Looking at the market's fundamentals, expectations of a supply glut heading into next year bolstered the bearish bets in the market, with further losses expected in the near-term. "The overall trend is downward.
I think that is becoming more and more clear ever since the market broke down last on Friday, and it's being signalled by the general increase in the size of exchange-registered stockpiles," said Dan Vaught, futures analyst with A.G. Edwards.
London Metal Exchange copper warehouse stocks fell by 125 tonnes to 151,950 tonnes on Thursday, while Comex stocks were down by 274 short tons at 25,818 short tons on Wednesday.
On Wednesday, Bloomsbury Minerals Economics forecast a global deficit of 235,000 tonnes this year, from 328,000 tonnes previously, and for next year, forecast a surplus of 45,000 tonnes from a deficit of 130,000 tonnes.
The increased availability of metal in the warehouses raised market fears of the general downturn in demand, especially from emerging market countries such as China.
China, the world's top consumer of copper and aluminium, imported 37.7 percent less refined copper and alloy in the first 10 months than in the year-ago period, official Customs data showed on Wednesday.
However, refined copper imports from China could rise to 1 million tonnes in 2007, after destockings from government reserves depressed imports this year, an executive at state-owned trader Minmetals Corp said.
On the economic front, US October industrial output rose 0.2 percent after a 0.6 percent fall in August, while capacity use was little changed at 82.2 percent compared to 82.1 percent the prior month.
Meanwhile, the top union at Chile's Codelco Norte, the top division at world No 1 copper producer Codelco, voted on Wednesday to reject contract proposal, union and Codelco sources said, giving the company six weeks to avoid a strike.
Codelco is offering premiums of $130 per tonne for refined copper for delivery in 2007 to Chinese clients, trade sources said on Thursday. LME three-month copper settled at $6,800 a tonne, down 1.6 percent from $6,910 on Wednesday, when it hit a four-month low at $6,760.