BASE METALS: Copper Falls as Recovery Concerns Still Weigh

NEW YORK, Aug 20, 2010 (Dow Jones Commodities News via Comtex) --

Copper futures settled lower Friday, nearly wiping out their gains for the week, as prices were pressured by continued concerns about the resilience of the economic recovery.

Copper for December delivery settled 2.8 cents, or 0.8%, lower at $3.3115 a pound on the Comex division of the New York Mercantile Exchange.

Copper futures rose as much as 4.2% to $3.41 pound earlier in the week amid a bit of a recovery in the equity markets, but a wave of disappointing jobs and business conditions data Thursday morning reversed that momentum, pulling down copper prices, as well as the equity and energy markets. Copper's Friday settlement was just 1.2% above its close from a week earlier.

"It's still stinging from poor data yesterday," said Craig Ross, vice president with ApexFutures.com.

After negative economic reports like weak U.S. jobs data and an unexpected drop in the Federal Reserve Bank of Philadelphia'sAugust business index weighed on prices this week, investors are shifting their attention to the data releases scheduled for the coming days.

Several reports are on the horizon that could impact copper prices, such as U.S. existing home sales for July, due Tuesday, and the preliminary second-quarter U.S. gross domestic product figure, a key market-moving data point that is due next Friday.

Copper is particularly sensitive to economic data reports because it is widely used throughout the manufacturing and constructioindustries. Copper is also used to make pipes, wires and sheets for building and home construction and in the manufacturing of automobiles, appliances and electronics.

In positive news for the copper outlook Friday, after a slight gain Thursday, inventories of copper stored in London Metal Exchange warehouses fell 1,800 metric tons Friday, leaving them at 401,725. The most recent Comex inventory data, released late Thursday afternoon, showed that stockpiles at Comex warehouses were down 132 short tons at 96,506 short tons.

Meanwhile, once-a-week data released on Fridays by the Shanghai Futures Exchange showed a weekly decline in copper inventories of 3,499 metric tons to 110,371.

"These draws likely reflect slightly tighter domestic spot supply with production cuts (due to maintenance and weather issues) meeting with slower, but still robust summer demand," the Barclays analysts wrote Friday.

Copper settlements (ranges include electronic and pit trading):
Sep $3.2910; down 2.8 cents; Range $3.2495-$3.3315
Dec $3.3115; down 2.8 cents; Range $3.2705-$3.3485