US copper futures lost 2.4 percent of their value by the close on Tuesday, as sentiment took a hit amid a broader sell-off in the metals complex, analysts said. "Silver had a sharp decline in a technical breakdown and gold hit multi-month lows, so that selling spilled over into the copper," said one floor dealer down on the floor of the exchange.
Copper for September delivery ended down 8.15 cents, or 2.4 percent, to $3.3165 a lb on the New York Mercantile Exchange's COMEX division, just off the bottom of its $3.3135 to $3.3980 trading band.
The declines pulled futures prices down to their weekly lows, making tomorrow's action that more important, analysts said. "It will be interesting to see if we test Monday's lows at $3.2950 (a lb) and hold any losses below there in the days ahead ... that will be a big test," said Eric Wittenauer, futures analyst with A.G. Edwards.
Final estimated futures volumes totalled 17,998 lots, compared with the 11,074 lots recorded on Monday. As of June 25, open interest in COMEX copper futures rose 364 lots to 80,015 contracts. Additional pressure was felt from the ongoing rollovers as traders move out of July copper on into later-dated contracts before July goes into delivery at the end of the month.
Open interest in July copper fell 2,202 lots by June 25, to 11,398 contracts, while interest in September grew 3,158 lots to 47,748 lots. Copper, used in construction and electrical wiring, faced further resistance after United States economic data showed new home sales in May fell more than expected while consumer confidence in June hit a 10-month low, which seemed to signal sluggish economic growth this year.
"These are numbers that are consistent with a slowing down in activity, a moderation on the consumption side," said Steven Wieting, an economist with Citigroup Global Markets, Inc, in New York. Sales of new United States homes fell 1.6 percent last month to an annual rate of 915,000 from a downwardly revised rate of 930,000 in April, the Commerce Department said on Tuesday. Analysts had been looking for May new home sales of 925,000.
The trade continued to monitor the festering labour disputes in both North and South America, which if prolonged, could have a significant impact on supply. Copper output at Chile's Codelco was unaffected on Tuesday by a second day of protests staged by subcontract workers who on Monday blocked roads and set fire to buses, Codelco's chief executive officer said.
Codelco CEO Jose Pablo Arellano said output was normal at all five divisions of the world's largest copper miner, including El Teniente, the scene of Monday's disturbances, and Codelco Norte, which accounts for over half the company's production.
Also in Chile, workers at the Collahuasi copper mine are expected to vote on strike action this week to protest management's latest contract offer. Meanwhile, workers at Southern Copper Corp's Peru operations stayed on strike on Tuesday demanding higher salaries, and prepared to meet with company and government officials seeking to end the work stoppage.
And, striking workers at Xstrata Plc's Canadian copper refinery (CCR) in Montreal have not had contact with the company and officials say talks are unlikely until after a national holiday on July 2.
On the fundamental front, world refined copper production lagged consumption by 100,000 tonnes in the first quarter of this year, against a surplus of 60,000 tonnes in the same year-ago period, the International Copper Study Group (ICSG) said in its latest monthly bulletin.
London Metal Exchange copper warehouse inventories eased 75 tonnes to 118,950 tonnes on Tuesday, while COMEX stocks declined 177 to 22,569 short tons on Monday. London Metals Exchange (LME) copper for delivery in three months settled down $120 at $7,360 a tonne from Monday's close.