NEW YORK, Mar 22, 2011 (Dow Jones Commodities News via Comtex) -- Copper futures ended slightly higher on low-volume trade Tuesday as traders looked for developments at Japan's troubled nuclear complex and the international intervention in Libya's civil conflict.
The most-actively traded contract, for May delivery, settled up 2.7 cents, or 0.6%, at $4.3130 per pound on the Comex division of the New York Mercantile Exchange.
The thinly traded March-delivery contract settled up 2.8 cents, or 0.7%, at $4.3035 per pound. The March contract expires March 29.
Copper trading volumes have been declining over the last three trading days as traders struggle to quantify the impact of geopolitical risk on the copper market.
"There's not much action at all...we don't have enough information to come to a steady conclusion," said Ralph Preston, analyst at Heritage West Financial Inc.
Japan's troubled nuclear facility continued to dominate copper traders' attention. Authorities reported all six nuclear reactors have been reconnected to the electric grid. The Fukushima Daiichi nuclear complex was heavily damaged by the earthquake and tsunami on March 11, and since then authorities have struggled to keep the reactors from overheating and releasing dangerous amounts of radiation. Authorities are now checking damage to the cooling systems, with hopes of restoring cooling function to the complex and averting the threat of a meltdown.
Attention is shifting to the reconstruction effort. Much of the country's east coast was decimated by the natural disaster, and hopes of higher-than-forecast Japanese demand for copper have already lifted copper prices from recent lows.
But the increases will be at least partially counterbalanced by lower copper demand from Japanese car makers, many of which have extended production shutdowns in the wake of the natural disaster. Toyota Motor Corp., the world's largest car maker by sales, said it will keep domestic assembly lines shut through Saturday, losing around 140,000 vehicles. Honda Motor Co. said its output suspension through Wednesday will amount to a production loss of 27,000 vehicles.
"A lot of traders are not sure which way to go with things. We're not seeing a lot of positions put on the market," said Frank Lesh, broker and futures analyst with FuturePath Trading.
Meanwhile, allied air strikes against Libyan leader Col. Moammar Gadhafi's forces continued Tuesday. The United Nations Security Council last week approved a resolution to use all necessary means to enforce a no-fly zone over Libya and prevent further civilian casualties by Gadhafi-led attacks.
The crude oil market has welcomed the Western coalition's intervention in Libya, with oil prices retreating to $103.69 a barrel recently, from highs of $106.95 earlier this month. Higher energy prices threaten economic growth and are considered a burden on copper prices.
"Clearly, we've priced in all the situations out there, and we're just waiting for the next catalyst," Lesh said.
Copper futures have brushed off the damping influence of Monday's weaker-then-expected U.S. existing-home sales data.
"Despite one of the largest US housing slumps in history, the copper market remains tight," Walter de Wet, head of commodity strategy at Standard Bank, said in a note to clients. The bank estimates a copper deficit of around 385,000 metric tons this year.
Copper inventories, considered an indicator of physical demand for the metal, saw a net increase as inflows at London Metal Exchange-listed warehouses outpaced a small outflow at Comex-listed warehouses. LME copper inventories added 3,850 metric tons to take total stocks to 434,350 metric tons; meanwhile, Comex copper stocks fell by 21 short tons to 84,486 short tons.