Winter Park, Florida 04/05/2016 - Copper slid lower on Wednesday as the metal's dour fundamentals finally overshadowed recent momentum and fund buying.
Copper for July delivery on the Comex division of the New York Mercantile Exchange ended the session down 3.25 cents, or 1.5 percent, at $2.1865 per pound. Trade ranged from $2.1795 to $2.222.
"With the dollar remaining steady, metals continued the slide south which started yesterday although turnover was low/moderate and business conditions were generally quiet," Sucden sand in a note.
Fundamentals for the red metal remain decidedly lacklustre. Shanghai bonded copper stocks rose 10 percent to 580,000-610,000 tonnes by the end of April from 530,000-550,000 tonnes a month previously, according to a FastMarkets survey of multiple warehouse companies.
"The trading of copper is not active - buying interest is quite thin so lots of copper entered warehouses," a warehouse source in Shanghai said.
Not surprisingly, spot Shanghai copper cathode premiums are at $40-50 per tonne CIF, the lowest in more than three years, according to FastMarkets' price assessment.
"When we talk to the end-users, they say their stock of final products is piling up so there's no fresh demand at the moment," an Asian trader said.
On the other side of the market, paper investors are starting to taking profits after months of healthy gains.
"Besides the higher risk aversion among market participants, as evidenced also by falling stock markets, there has doubtless been profit-taking, given that the previous price rise had been driven to a major extent by speculation," Commerzbank noted.
Commodity funds netted more cash in the first quarter of this year than any other type of hedge fund, with the $4 billion of inflows into the group being the largest for any quarter in more than six years, according to a Wall Street Journal report.
"The commodity space has now brought in more money that it has had to redeem for seven straight months, the longest winning streak ever," INTL FCStone's Edward Meir noted.
In data, US trade balance was positive at -40.4B, while final services PMI was positive at 52.8 and ISM non-manufacturing at 55.7 beat expectations of 54.9. Factory orders at 1.1 percent were also higher than the 0.7 percent forecast. Still, ADP non-farm payroll change disappointed at -1.0 percent, against a projection of -1.3 percent.
As for the wider-markets, the dollar was unchanged at 1.1495 against the euro, while the Dow Jones industrial average and S&P 500 were down 0.56 percent and 0.59 percent respectively.
Light sweet crude (WTI) oil futures on the Nymex were up 24 cents, or 0.55 percent, at $43.89 per barrel, while the most-actively traded gold contract was at $1,282.50 per ounce, down $9.30.
(Additional reporting by Vicky Chen and Archie Hunter)