Copper ends marginally lower

Surge in stockpiles and latest FOMC minutes keep prices low

Copper prices ended lower on Tuesday, 03 April 2012 at Comex. Copper edged lower in thin conditions on Tuesday, backing away from a near two-month high as another large build in warehouse stockpiles withdrew some of the bullish momentum from Monday's upbeat U.S. and Chinese manufacturing data. It was the first down day for copper in the last three trading sessions.

Copper for May delivery ended lower by 0.2 cents (0.1%) at $3.92 a pound at Comex on Tuesday. It fluctuated between $3.89 and $3.94 throughout the day. First quarterly gains for copper reached 11%. Monthly, however, copper declined 1.3% in March.



Red metal prices for three-month-delivery at LME fell $25 (0.3%) to $8,615 a metric ton on Tuesday. Copper has gained about 10% this year, spurred by improved U.S economic data, ultra-loose monetary policy in the western world and moves to stem Europe's debt crisis.

For the year 2011, copper shed 23% following a 30% increase in 2010 and a 140% jump in 2009, boosted by surging demand from China's manufacturers. China accounts for 40% of the world's refined copper consumption.

Volumes were light in a holiday shortened week on Tuesday, with China's financial markets shut until Wednesday, and many markets closed on Friday and Monday for the Easter weekend.

A sleepy market place got a bucket of cold water thrown in its face in afternoon trading on Tuesday when the latest FOMC minutes were released and hinted further that any additional quantitative easing from the U.S. central bank is not likely. Some FOMC members even pondered at what point to begin to look at raising U.S. interest rates. That news sent the U.S. dollar index solidly higher and many commodity futures markets lower.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies rose by almost 0.7%. It was essentially trading flat for the entire morning and rose only after Fed's comments.

At Wall Street, The Commerce Department in US reported that orders for goods produced in U.S. factories rose 1.3% in February, 2012. Market had expected orders to climb 1.5%. Factory orders were revised down to a 1.1% decline in January from a prior estimate of a 1.0% drop.

Copper eased after data showed another build in LME-monitored warehouse stockpiles, the third such increase in the last 4 days. Data on Tuesday showed they climbed 3,100 tonnes to 260,650 tonnes, with 2,900 tonnes entering warehouses in Busan, South Korea.

Among other traded metals at LME on Tuesday, lead in London rose 0.4% at $2,069 a ton and nickel closed higher by 1.22% at $18,450 a ton. Aluminum closed lower by 0.2% at $2,125 a ton, and zinc closed higher by 0.7% at $2,022 a ton.

At the MCX, copper prices for April delivery ended lower by Rs 0.65 (0.14%) at Rs 438.35/Kg. Prices rose to a high of Rs 441.95/Kg and fell to a low of Rs 437.25/Kg.