Copper rose in London, rebounding from a three-week low, on speculation U.S. politicians will agree to increase the government’s borrowing limit and avoid a debt default.
U.S. lawmakers for the first time yesterday embraced one possible path out of the fiscal impasse, a short-term deal to avoid default, even as they remained far apart on how to make it happen. Borrowing authority will expire in a week without an accord. The Standard & Poor’s 500 Index (SPX) of U.S. equities closed higher yesterday after sliding as much as 0.5 percent.
“Signs of a debt-ceiling deal helped the U.S. stock market bounce back up yesterday and support LME metals this morning,” Richard Fu, director for Asian commodity trading at Newedge Group SA in London, said by e-mail.
Copper for delivery in three months added 0.3 percent to $7,119 a metric ton by 11:45 a.m. on the London Metal Exchange. Prices dropped for a third day yesterday and touched $7,087, the lowest since Sept. 18. Copper for delivery in December rose 0.1 percent to $3.2355 a pound on the Comex in New York.
A U.S. default might “seriously damage” the world economy, the International Monetary Fund said this week.
Still, LME copper is down 2.5 percent this month amid signs of expanding production. World supply from mines will increase no less than 4 percent annually in the 2012-16 period, Standard Bank said this week in a report, compared with less than 1 percent in four of the six years before 2012.
“Caution is the watchword,” Andrew Silver, a broker at Triland Metals Ltd. in London, said by e-mail today. “My impression from this week is that producers are nervous. They know surpluses are here and premiums will likely be pressured.”
Copper stockpiles tracked by the LME, at the lowest level since March, slid for a 26th session to 512,450 tons, daily exchange data showed. Orders to remove the metal from warehouses gained the most in almost two weeks to 263,000 tons.
Aluminum, zinc, lead and nickel rose in London. Tin fell.
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