BASE METALS: Copper Futures Eke Out Gain, But Momentum Slows

NEW YORK, Aug 18, 2010 (Dow Jones Commodities News via Comtex) --

Copper futures closed slightly higher Wednesday, but the metal didn't retain its momentum from a day earlier as gains in the U.S. stock market slowed.

Copper for December delivery settled 1.2 cents higher at $3.3705 a pound on the Comex division of the New York Mercantile Exchange.

The modest gains came a day after the metal rose 3.6 cents Tuesday, pushed up by a solid recovery in the equity markets. But there wasn't much follow-through Wednesday on that equity rally, and so copper also lost momentum, particularly since there was little significant macro-economic news moving the markets.

"A pit of a pullback was in order," said Edward Meir, senior commodity metals analyst with MF Global.
Copper, seen as an economic indicator because it's widely used in manufacturing and construction, often closely tracks the stock market.

After trading lower earlier in the day amid profit-taking, a couple positive fundamentals helped copper eke out a gain by the close. The dollar fell against the U.K. pound after minutes from the Bank of England's rate-setting committee painted a more positive economic picture than had been expected. A weaker dollar often boosts copper by making the dollar-denominated commodity less expensive for buyers using other currencies.

Another fundamental positive for copper was a continued drawdown in inventories. Inventories of copper stored in London Metal Exchange warehouses fell 1,725 metric tons Wednesday, leaving them at 403,300. The most recent Comex inventory data, released late Tuesday afternoon, showed that stockpiles at Comex warehouses were down 243 short tons at 96,977 short tons.

Concerns about a slowdown in growth in China, the world's largest consumer of copper, has been an overhang on copper prices recently, but the continued downward trend in inventory levels belies those concerns, said Frank Lesh, a broker and futures analyst with FuturePath Trading.

Copper settlements (ranges include electronic and pit trading):

Sept $3.3495; up 1.1 cents; Range $3.3050-$3.3550
Dec $3.3705; up 1.2 cents; Range $3.3275-$3.3745