Copper futures in New York lost nearly 2 percent of their value at the open on Wednesday, following a softer tone on the London Metal Exchange after a rather calm expiry of aluminium options, analysts said.
"Perhaps not surprisingly, with the anticipation and hype surrounding option expiration behind us, the markets are falling back a bit this morning," said Edward Meir, metals analyst with Man Financial.
Copper for March delivery was off 5.60 cents, or 1.7 percent, at $3.1910 a lb. by 10 am EST (1500 GMT) on the New York Mercantile Exchange's COMEX division, dealing between $3.1650 and $3.2460. Technicians pegged initial resistance in March copper at the contract's 50-day moving average, near $3.30, followed by $3.40. Underlying support was seen at the November 17 low of $3.10, and then at the psychological $3.00 level.
Spot December fell 5.95 cents to $3.1750, just above its morning trough at $3.1625. Estimated volume at 9 am amounted to only 1,000 lots. A large number of outstanding call options to buy three-month aluminium futures at $3,000 a tonne expired Wednesday on the London Metal Exchange without any fireworks.
These contracts - nearly 10,000 - had been under the spotlight in recent days and traders expected the holders to try to ramp up the price of aluminium futures to bring them nearer to the strike price.
The December options expiry assisted in the firmer tone of the base metal complex this week, analysts said, but the holders' failure to exercise the options took the wind out the market's sails.