Copper prices were sharply lower Tuesday on long liquidation ahead of today's expiring March 1990 futures contract.

Prices for the March futures contract dropped to a low of $1.20 a pound, off more than 600 points. Values for the March delivery on the Commodity Exchange Inc. were $1.215 a pound, off 455 points.The March premium over the May contract also shrank to around 7 cents in the sell-off, down from the previous spread of 11.30 cents, dealers said.

Comex hiked the margin requirement on March contracts to 100 percent of their value, sparking off the heavy liquidation.

Declaration of a force majeure Monday by Southern Peru Copper Corp. on blister shipments to Minero Peru's Ilo refinery had a firming impact on the market early Tuesday when prices gained more than a cent from the previous close. But the weakness in March deliveries pulled the rest of the market down, dealers added. The news came after Tuesday's Comex copper market close.

Meanwhile, the March liquidation prevented May from rallying on Tuesday, a floor trader said.

The trader put support for copper at $1.14 a pound, basis the May contract. Failure to rally the market through $1.145 could result in a test of the lows, the trader added.

"People made a nice profit and the market is still fairly steady," another trader told Knight-Ridder Financial News. Players who have held March contracts through the March notice period "still have a profit if they switch into May," where the spread is around 660 points.

In recent weeks, higher copper prices were sustained by supply concerns relating to labor problems at the world's leading mines, including Southern Peru Copper Corp. The metal has remained sensitive to disruptions at mining sites, given drops in warehouse stocks.

However, demand from key users remains low. Sluggish housing markets and slow auto sales eased a potentially tight supply situation. March is traditionally the beginning of a high demand period for copper keyed to increased industrial activity.