news

DOW JONES NEWSWIRES



Speculative buying enabled high-grade copper futures to rise Thursday,
although activity remains choppy as the market is also running into periodic
bouts of liquidation pressure, traders said.

Overall, fundamentals remain constructive but copper appears to be in a
consolidation phase below its recent all-time highs, they reported.

The most-active July copper contract rose 3.95 cents to settle at $3.7110 per
pound on the Comex division of the New York Mercantile Exchange.

Some consolidation can be expected after prices more than doubled during the
first few months of the year to a contract high of $4.04 in July copper and a
Comex record of $4.16 for the May futures, market watchers say.

"The market is almost like people," said Larry Young, senior trader with
Infinity Brokerage Services. "Sometimes, you have to take a breath. That's
really what we're seeing."

At the moment, the market appears to be range-bound between $3.60 and $3.85,
roughly the trading band so far this week. This is an unusually wide range for
such a short period of time, as it exceeds the entire range of many full
calendar years, but is indicative of copper's recent volatility, Young noted.

"That's huge," Young said of the range. "But because of the violent moves,
that's what we've charted out for ourselves."

Said another trader, "It's thin and volatile, and I don't think that's going
to change any time soon."

The market was choppy in the early going, posting a pit-session range of 11
cents in the first 1 1/4 hours - from $3.63 moments after the open to a high of
$3.74. Some choppiness continued after this, but prices mostly remained in a
$3.68 to $3.72 range over the last three hours.

When copper was bouncing from its early-session weakness, traders cited
speculative buying. And when they pulled back some from the high, a dealer
cited speculative profit-taking.

"It's the same-old, same-old. It's all spec trading up and down," said one
trader. "You see some buying come in at the lower levels. There seems to be
some bargain hunting and a little bit of short covering."

But some "nervousness" appears to emerge on rallies, prompting some longs to
book profits, he says. There also may have been some trade selling, he adds.

Copper managed a gain for the day with the help of speculative and fund
buying on a day when the other precious metals were sharply lower. Many times,
base and precious metals move together as funds move in and out of them at the
same time.

"They're all overbought," said Young. "Out of all of them, copper has the
strongest fundamentals. So that, at the end of the day, is going to hold them
up more."

For some time now, traders have been citing strong demand and tight global
supplies. A report Thursday from the International Copper Study Group listed a
surplus of 24,000 metric tons for February, or 52,000 after seasonal
adjustments. However, with global stockpiles still low, strength in the market
tends to be exacerbated by any mine shutdowns such as the one occurring against
Grupo Mexico.

Inventories of copper in London Metal Exchange warehouses rose 225 metric
tons Thursday, leaving them at 108,150 metric tons. The most recent Comex
stocks data, released late Wednesday afternoon, were down 545 short tons at
11,923 short tons.


Settlements (ranges include overnight and day sessions):
May (HGK06) $3.8700; up 3.90c; Range $3.7200-$3.8950
July (HGN06) $3.7110; up 3.95c; Range $3.5650-$3.7400