The price of copper rose to a 1-1/2-month high above $3.52 a lb. in futures trade on Monday, as investors flocked to the buy-side of the market amid sharp losses in the dollar and dwindling supplies of the metal, analysts said.
At the New York Mercantile Exchange's Comex division, copper for September delivery peaked at $3.5335 a lb., its highest level since May 14, when copper was retreating from contract highs reached earlier in that month. The benchmark contract closed up 7.65 cents, or 2.2 percent, to $3.5270, its best settlement since May 11.
Technicians noted the settlement above the $3.52 level looked positive for the market to continue its week advance on Tuesday, but would need to be backed by stronger volume in the near-term for the rally to be sustained.
"Ideally, what we are going to want to see is continued strength on volume over the next couple of days and weeks. And, equally important, we are going to want to see it get above to a new mullet-month high on volume," said Adam Sarah, founder of GlobalMacroResearch.com in New York.
"Price is primary, volume is secondary. On a weekly chart, if we can get prices above near-term resistance over the last couple of months, odds are we will get another leg higher. If prices fail to get above there, expect the sideways action to continue," Sarah said. Final estimated futures volumes reached 12,165 lots, in line with Friday's official count at 11,458 lots.
As of June 29, open interest in Comex copper futures fell 428 lots to 79,102 contracts. In currencies, the dollar fell to within half a cent of a record low against the euro, prompting buyer interest in the dollar-denominated metal. The euro was almost 0.6 percent higher at $1.3624 in late afternoon New York trade, in sight of a record high just above $1.3680 hit in April.
A weaker US currency tends to make dollar-priced metals more attractive to non-US investors. The industrial metal received an additional boost on the heels of a better-than-expected reading in US manufacturing growth, which showed the factory sector was so far weathering the housing slump. The Institute for Supply Management's manufacturing index rose to 56.0 in June from 55.0 in May, surpassing forecasts for no change.
The June reading was the survey's highest since April of last year, and the report reinforced the view that US economic growth rebounded following an anaemic first quarter.Fundamentally, a downtrend in copper stockpiles monitored by the London Metal Exchange (LME) and lingering labour disputes around the globe kept bullish hopes alive that demand will continue to outpace supply.
LME copper stocks dropped 2,100 tonnes to 112,600 tonnes on Monday, there lowest since last October. Comex stocks were unchanged at 22,123 short tons on Friday.
On the labour front, Chile state miner Codelco was repairing an electrowinning plant at its largest copper division on Friday, a day after production was stalled amid protests which had resulted in 1,240 tonnes worth of lost production.
Elsewhere in Chile, Collahuasi, one of the world's largest copper mines, requested government mediation on Friday to try to avoid a strike by 698 workers who rejected a contract deal this week, the head of the union said.
The sides will now have five working days to reach a deal or face a strike on July 9. Meanwhile, workers at Polish copper group KGHM have voted to authorise a company-wide strike if management does not meet their wage demands, a union representative said last week.
In Canada, Strata Plc said it has obtained an interim injunction and property protection order to safeguard employees, assets and operations for the duration of a strike at its copper refinery (CCR) in Montreal.
In trade data out after the close on Friday, speculators boosted their net short exposure by 7 percent to 8,923 lots from 8,362 lots the previous week, the United States Commodity Futures Trading Commission (CFTC) reported. LME copper for delivery in three months touched $7,725 a tonne, the highest since May 16, before closing at $7,710, up $150 from Friday's close.