US copper futures tumbled on Wednesday in a technical sell off, but traders thought the red metal was merely expanding its range as it continues to consolidate its recent run to a one-year high.
"It's a bit of a tug of war. It was down 7 cents, then it came back to the highs, and now it's down again. There's not a lot of volume. It takes very little to push the market around. There's really not a lot going on at all," said one broker.
He added that most of the selling was technical. When prices moved to the session low, he said, he thought they would consolidate there, but he noted that signs of strength in the London copper market were providing an underpinning in New York.
Most-active copper for July delivery on the New York Mercantile Exchange's COMEX division was down 4.70 cents at $3.6755 a lb. in technical selling.
It slipped as low as $3.65, from a high at $3.7550. "Technical corrections pose some downside risk, but from a fundamental perspective we remain positive and see scope for further gains in base metals." Barclay's Capital said in a note on Wednesday.
A number of copper-positive factors provided support, including signs of strong global demand for the metal and another steep drawdown in stocks on the London Metal Exchange.
Despite Wednesday's selling, metal traders said they still had their sights on copper at $4.00 a lb. In the meantime, one trader predicted prices would trade in a range around $3.65 to $3.73 a lb. on the July contract. Another player said he was looking for prices between $3.60 and $3.80 a lb before an attempt higher.
Dan Vaught, futures analyst with A.G. Edwards, said he was not convinced that $4.00 a lb. was on copper's horizon.
He said he thought the market could be in danger of moving back below $3.70, a close below which might mean the recent push above that level was a false breakout.