US copper futures firmed at the open on Thursday, with prices poised for a retest of key technical resistance levels, although much depended on Wall Street and its ability to find some traction, analysts said.
"We are showing some resiliency this morning," said Scott Meyers, senior trading analyst with Pioneer Futures in New York, referring to the market's inability to sell off after failing at the January 9 high of $3.3785 a lb overnight and in the face of shaky equity markets. "We got to $3.3715, but can't break through. If we can get a firmer tone in equities get through $3.38 on a settlement, it's going to start to look good. Then we can begin to look at $3.50."
Copper for March delivery was trading up 4.45 cents to $3.3535 a lb by 11:02 am EST (1602 GMT) on the New York Mercantile Exchange's Comex division, moving between $3.2760 and $3.3715. Futures volumes were estimated at 7,901 lots by 10 am.
Fundamentally, copper prices have found recent support from the almost steady drawdowns in London warehouse stocks and weather-related production and transportation problems in China.
A 2,500-tonne decline in copper stockpiles monitored by the London Metal Exchange pushed inventory levels back down to 169,475 tonnes on Thursday - down 16 percent from a record peak on January 4. "It is possible that the stock decline is occurring as more metal heads to China, since the standstill in smelter operations there may be prompting a preference for refined cathodes as opposed to concentrate or scrap," noted MF Global metals analyst Edward Meir in a daily market comment.
Red metal investors were also keeping an eye on the recent increases in cancelled warrants, material tagged for delivery from warehouses and no longer available to the market. On the production front, Chile's Codelco, the world's largest copper miner, said on Thursday it planned to invest close to $2 billion in expansion and other efforts in 2008, compared with investment near $1.69 billion last year.
In other news, Chile's Escondida, the world's largest copper mine, boosted output in 2007 by 18.2 percent as it ramped up a new sulphide leach plant and it had a strike-free year.