Early US copper drifts in band of consolidation
NEW YORK, Aug 19 (Reuters) - U.S. copper futures steadied early Tuesday in an extended phase of consolidation following last week's collapse to six-week lows.
The metal's near-term outlook remained vulnerable to further downside pressure due to a rallying U.S. dollar, worrisome global economic prospects, and demand concerns highlighted by steady builds in London warehouse stocks, analysts said.
NOTE: For detailed report, click on [MET/L].
* Copper for September delivery HGU8 was trading down 0.25 cent at $3.3125 per lb by 10:12 a.m. EDT (1412 GMT) on the New York Mercantile Exchange's COMEX division.
* The early range contracted to $3.2815 to $3.3330.
* Last week, the benchmark September contract fell to its lowest level since early February at $3.2185.
* COMEX estimated futures volume at 3,357 lots by 9 a.m.
* Metals under recent pressure from the stronger dollar and fading energy prices - MF Global analyst Edward Meir.
* "We would therefore be approaching the periodic bounces we will inevitably see in metals with a great deal of caution for the balance of the quarter. In our view, weakening demand, as opposed to cutbacks in supply, is the far more dominant pricing variable, since it tends to be pervasive, harder to predict in terms of its cyclical duration, and does not lend itself to being switched on and off." - Meir.
* In currencies, the dollar resumed its upside momentum on Tuesday, hitting its highest 2008 level against a basket of currencies, boosted by soaring U.S. producer prices and fading oil.
* U.S. producer prices rose 1.2 percent in July, much higher than market forecasts for a 0.6 percent increase. The so-called core producer prices, which exclude food and energy, jumped 0.7 percent in July. [ID:nN18462463].
* July's surge in the producer price index heightened expectations the Federal Reserve will not cut benchmark interest rates this year, which should enhance the dollar's appeal to global investors.
* In midmorning trade, the euro EUR= fell to $1.4653, after earlier hitting a six-month low of $1.4631, according to Reuters data. It last traded at $1.4675, down 0.1 percent.
* Copper fails to react strongly to extremely weak data from the U.S. housing market, showing home building projects fell 11 percent in July to the lowest annual rate in more than 17 years and a 17.7 percent drop in building permits. [ID:nN19125834].
* London Metal Exchange copper warehouse stocks increased by 1,575 tonnes to 156,150 tonnes on Tuesday. London stockpiles have risen by more than 25 percent since early July and now stand at their highest level since February.
* COMEX copper stocks were down 156 short tons at 5,407 short tons on Monday.
* On the production front, Chile state copper mining giant Codelco said on Monday it reached a 10-year fuel supply agreement with a consortium led by the state oil company ENAP and Royal Dutch Shell (RDSa.L) valued at up to $3 billion. [ID:nN18476083]
* LME copper for delivery in three-months MCU3 last traded at $7,380 a tonne, up $25 from Monday's kerb close. (Reporting by Chris Kelly; editing by Jim Marshall)
