(MB) - LME copper tumbles as funds sell
2001-06-11 07:58 (New York)
June 8 (Metal Bulletin) - Fund selling of copper on the LME on
June 8 sent the price tumbling below $1,640 per tonne basis
three months.
According to one trader, the thin volume of this week's trading
"left the market wide open to the funds", who took advantage
of the market to trigger some stop-loss selling. "I believe it
was orchestrated by people who had sell stops in the market,"
said an analyst.
Attempts to get above the resistance level of $1,690 failed
earlier in the week, and copper seemed rangebound between
$1,660 and $1,690. Now prices look like dipping towards the
historical chart point of $1,634, but opinion differs on what
will happen to copper after that point.
"People will be reluctant to go aggressively short at these
prices unless there is more severe macroeconomic data,"
suggested one analyst. "We're bottoming out now," he added.
But another analyst reckoned that the $1,634 level would see
more selling. Today's close will be an important factor; the
market may well return swiftly to its former range as funds
square their positions.
Positive signs from the stock market and a rise in the crude
oil price had led to some short covering from traders and an
optimistic close at $1,684 on June 6. But news of Radomiro
Tomic workers ending their strike at the Chilean copper mine
did nothing to help sustain the market, despite the euro
regaining some strength.
June's options expiry also failed to ignite any interest. "It
has been incredibly boring," said a trader.
The International Copper Study Group also reported this week
that the copper supply-demand surplus stood at 120,000 tonnes
for the first three months of 2001 compared to a deficit of
50,000 tonnes a year earlier.
Figures for March show a 50,000-tonne surplus, compared to the
12,000-tonne surplus recorded in February. Refined copper
production was 1.34m tonnes in March, a rise from February's
1.19m tonnes. World usage was up from 1.18m tonnes in February
to 1.29m tonnes in March.
At the end of May 2001 the stocks of refined copper held by the
LME, Comex and SHFE totalled 641,000 tonnes, unchanged from the
end of April, but 53,000 tonnes higher than at the end of
March.
The cooling of rolled copper demand from Japan's electronics
sector has meanwhile turned to a freeze. Industry data from
Japan's brass and copper makers shows that total rolled copper
output in April plunged 8% from March to just 88,180 tonnes.
January-March output averaged 95,000 tpm and October-December
over 100,000 tpm thanks to buoyant demand from the country's
electronics sector.
However, in recent months this has drastically cooled and the
brass makers have been surprised at the suddenness of the
chill. Among the biggest losers, copper strip output plunged
21.5% year-on-year to 17,040 tonnes and brass strip output
dipped by 21.3% year-on-year to 10,157 tonnes. |
