Copper plummets most in 5 weeks on stimulus slowdown

LONDON: Copper fell the most in five weeks in New York amid concern a rebounding US economy will encourage the Federal Reserve to slow stimulus in the world’s second-biggest consumer of the metal.


AUS manufacturing gauge published on Tuesday reached a twoyear high, while figures due on September 6 will show employers hired more workers last month than in July and the jobless rate held at 7.4%, according to economists surveyed by Bloomberg. The Fed will release an economic outlook survey known as the Beige Book on Wednesday.

“The US economy continues to gather momentum, with pressure building up on the FOMC to start reducing its monthly asset purchases,” Andrey Kryuchenkov, a London-based analyst at VTB Capital, said in a report, referring to the central bank’s policy-making committee. Copper for delivery in December declined 1.8% to $3.2445 a pound by 7:18 am on the Comex in New York after sliding as much as 1.9%, the most since July 30.

Copper for delivery in three months fell 1.7% to $7,123 a metric tonne on the London Metal Exchange. Prices also retreated as copper stockpiles monitored by the LME increased for a fifth session to 603,900 tonne, the highest since August 6, according to daily exchange data.

Inventories expanded last week after eight straight weekly declines. Orders to remove copper from warehouses rose 1.9% on Wednesday, the most since August 5, to 288,975 tonne.

“An increase in LME inventories and mounting concern over the Fed scaling back stimulus are putting pressure on copper,” said Kazuhiko Saito, an analyst at commodities broker Fujitomi in Tokyo. Concern that the US is moving closer to a military strike against Syria also hurt sentiment, he said.

The copper market’s surplus will widen to 500,000 tonne in 2015 from 392,000 tonne next year, Max Layton, an analyst at Goldman Sachs Group, said in a report on Tuesday.