Copper Drops From Six-Week High as Metals Fall on Budget Impasse
Copper declined for the first time in four days after touching the highest level in more than six weeks as U.S. manufacturing unexpectedly shrank and a budget standoff intensified. Aluminum, zinc and lead retreated.
Copper for delivery in three months fell as much as 0.5 percent to $7,963.50 a metric ton on the London Metal Exchange and was at $7,977 at 4:30 p.m. in Tokyo. The industrial metal touched $8,045 yesterday, the highest level since Oct. 19.
U.S. manufacturing contracted last month amid concern about the potential economic fallout from the so-called fiscal cliff. Budget talks became more confrontational as House Republicans rejected President Barack Obama’s demand for higher tax rates, countering with a $2.2 trillion deficit-cutting plan that would trim Medicare and Social Security.
“The U.S. manufacturing data and concern over the fiscal cliff weighed down the metals market,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul.
The Institute for Supply Management’s factory index fell to 49.5, the lowest since July 2009, from 51.7 in October. The median forecast in a Bloomberg survey called for 51.4. Fifty marks the dividing line between expansion and contraction.
“A sustained improvement in prices looks unlikely until there is evidence of draws in Chinese inventories,” Barclays Plc analysts wrote in a report today. Stockpiles in the main Waigaoqiao bonded area in Shanghai have risen to 600,000 to 700,000 tons, the analysts wrote, citing warehouse executives.
The contract for March delivery fell 0.5 percent to $3.639 a pound on the Comex in New York. March futures closed 0.5 percent lower at 57,280 yuan ($9,201) a ton on the Shanghai Futures Exchange.
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