US copper futures lost more than 4 percent of their value by the close on Monday as investors turned bearish after reports of a possible suspension of planned copper purchases from China's State Reserves Bureau. Copper for March delivery shed 7.10 cents, or 4.55 percent, to settle at $1.4885 a lb on the New York Mercantile Exchange's COMEX division.
COMEX copper stocks fell by 87 short tons to 35,257 short tons as of Friday. COMEX copper net short position at 19,689 lots in week ended January 6, from 19,445 lots the previous week. COMEX copper could be vulnerable to another short-covering rally due to the rather large net short position - John Reade, metals analyst with investment bank UBS.
But, China's potential suspension of copper purchases and the end to the buying for the index rebalancing on Wednesday could place renewed short-term pressure on the metal, which would remove the impetus to cover short positions - Reade.