Copper fell after talks between President Barack Obama and U.S. congressional leaders failed to break a budget stalemate that spurred a partial government shutdown, eroding prospects for the economy and metal demand.
The impasse raises the odds of a prolonged standoff. That may derail negotiations to raise the government’s $16.7 trillion debt limit by Oct. 17, threatening a default that would roil global markets. Copper futures have dropped 1.8 percent this week.
There is “continued despondency over failure to resolve the government closure fracas, which threatens to stunt economic growth and hence demand for raw materials.” Michael Turek, a senior director at Newedge Group SA in New York, said in an e-mail.
Copper futures for December delivery slumped 1.4 percent to settle at $3.2685 a pound at 1:06 p.m. on the Comex in New York. Trading was 33 percent lower than the average in the past 100 days, data compiled by Bloomberg show.
The partial government shutdown may cost the nation at least $300 million a day in lost economic output, IHS Inc., a research company, has estimated. China is the world’s top copper user, followed by the U.S.
The metal “is going to sit in a tight trading range until the political standoff in Washington gets taken care of one way or another,” Mark Lewon, the president of Salt Lake City-based Utah Metal Works Inc., said in an e-mail. “The potential remains for copper to drop if the uncertainty does not get lifted.”
On the London Metal Exchange, copper for delivery in three months fell 1.3 percent to $7,185 a metric ton ($3.26 a pound). Aluminum, lead, tin and zinc dropped.
Nickel fell 1.6 percent to $13,525 a ton after touching $13,524, the lowest since July 31. This year, the price has dropped 21 percent, the most among six main metals on the LME.
Glencore Xstrata Plc said it suspended operations at its Falcondo nickel mine in the Dominican Republic because of the price slump.
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