US copper futures lost some ground early Friday after vaulting to their highest levels in three weeks, with a stronger dollar and quarter-end position squaring slowing some of the recent momentum, traders said.
"We're ending the quarter, so between today, Sunday and Monday, you're going to see more of the same ... guys locking in some of this last week's upward move," said Larry Young, senior trader at Infinity Futures Inc in Chicago. "There may be some quick speculators that take the downside in anticipation of that, so we could see a press further."
Copper for May delivery was off 3.70 cents at $3.8360 a lb by 10:09 am EDT (1409 GMT) on the New York Mercantile Exchange's Comex division, pulling back from an earlier session peak of $3.9275, its loftiest price level since March 7.
Futures volumes were estimated at 4,259 lots by 9:00 am. Earlier, the metal shot higher on the back of weekly inventory data from China which showed copper stockpiles in warehouses monitored by the Shanghai Futures Exchange declined by 18 percent.
Copper inventories fell 12,217 tonnes, or 18 percent, to 55,607 tonnes, snapping a string of weekly increases in place since late January. Whether or not the outflows were shifting to overseas warehouses or funnelling through to Chinese end-users remained to be seen, analysts said.
Despite the profit-taking losses, copper's supply/demand fundamentals remained tight, with falling global inventories and lower output at some major mines highlighting the latest data from the International Copper Study Group (ICSG). The ICSG reported that world refined copper use exceeded output by 42,000 tonnes in 2007 versus a 2006 surplus of 287,000 tonnes.