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Comex Copper Softer On Chinese Concerns

Jun 03, 2010 (Dow Jones Commodities News via Comtex) -- By Allen Sykora

Copper futures are under modest pressure Thursday on continuing worries about potential for Chinese demand to abate, but the metal could well recover if equities maintain their recent strength.

Around 9:44 a.m. EDT (1344 GMT), copper for July delivery fell 3.95 cents, or 1.3%, to $3.0010 per pound on the Comex division of the New York Mercantile Exchange.

"There seems to be a lot of talk about China slowing down," said Frank Lesh, broker and futures analyst with FuturePath Trading in Chicago. "That's one of the problems at the moment."

The market is mindful that Chinese authorities have taken steps so far this year to cool the economy and real-estate sector in particular. Also, the Purchasing Managers Index for China's manufacturing sector fell earlier this week. The country is especially important to the copper market since it is the world's largest consumer of the metal.

Also, whereas the dollar index is flat so far this morning, recent strength amid euro-zone debt worries still could be holding copper back, Lesh said. A muscular U.S. currency hurts copper by making it more expensive for holders of other currencies.

Otherwise, traders suggest that sentiment in other markets should be favorable to copper. One New York trader cited stronger equities a day after the Dow Jones Industrial Average posted a solid advance.

This, coupled with a stabilizing euro, could enable base metals to eventually "regroup," said MF Global analyst Edward Meir in New York.

"We suspect that with the short-term pendulum now swinging upwards, metals should follow, the current disconnect notwithstanding," Meir said.

Lesh put initial chart support for July copper around $2.95 to $2.92 a pound, then $2.88 to $2.85. He pegged resistance around $3.10 to $3.15.

-By Allen Sykora, Dow Jones Newswires; 541-318-8765; [e-mail]

(END) Dow Jones Newswires

06-03-10 0952ET

http://news.tradingcharts.com/futures/4/1/140583114.html