Metals News
BASE METALS: Comex Copper Slips As Traders Book Gains
industry news
Mar 4,2011

NEW YORK, Mar 03, 2011 (Dow Jones Commodities News via Comtex) -- Copper futures closed slightly lower Thursday, after traders cashed in profits despite upbeat economic data and an equities market rally.

The most actively traded contract, for May delivery, settled down 0.2%, or 0.15 cent, at $4.4900 per pound on the Comex division of the New York Mercantile Exchange.

The front-month contract, for March delivery, settled down 0.1%, or 0.5 cent, at $4.4750 per pound.

Copper's soft decline came on a day marked by weaker oil prices and stock market gains, both of which are considered positive for economic growth. Copper prices tend to follow industrial stocks higher, as the metal is widely used in manufacturing. But investors moved to cash in recent gains, pushing prices lower throughout Thursday.

"It's profit-taking on a market that's been enjoying a very significant rally," said Scott Meyers, senior trading analyst with Pioneer Futures division of MF Global.

Despite Thursday's decline, copper is up 4.6% from its Feb. 23 low of $4.2915, as positive economic and industrial data fan expectations of growing metal demand.

These expectations were reinforced earlier in the day by a better-than-anticipated weekly U.S. jobless claims report. The number of workers filing new unemployment claims fell by 20,000 to 368,000 in the week ended Feb. 26, the lowest level since May 2008.

The upbeat data surprised economists, who expected claims to rise by 9,000 to a total of 400,000.

"It indicated that people have money in their pocket, and that brings ideas of more spending on refrigerators, cars and other things that use copper," said Sterling Smith, analyst with Country Hedging.

Copper prices also saw support from a significantly weaker dollar, which retreated to a near four-month low against the euro after hawkish comments from European Central Bank President Jean Claude Trichet. The euro was recently at $1.3936, up from $1.3868 late Wednesday

A weaker dollar tends to boost demand for dollar-denominated copper futures, as the contracts appear cheaper to buyers using foreign currencies.

Some market watchers also attributed Thursday's decline to traders positioning themselves ahead of the February U.S. employment report, due early Friday morning. Copper prices are particularly sensitive to employment data, and traders often reduce their holdings ahead of such reports to limit risk.

"There's going to be a lot of position squaring this afternoon and through the night ahead of that 8.30 a.m. number," said Meyers.


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