Copper Swings as Revived U.S. Economy Fuels Tapering Speculation

Copper swung between gains and drops in London as signs of an improving U.S. economy spurred more analysts to say the Federal Reserve will start slowing economic stimulus in the nation as soon as next week.

The Fed may begin cutting stimulus at its Dec. 17-18 policy meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, up from 17 percent as of Nov. 8. The U.S. is the world’s second-biggest copper consumer. Money managers’ bets on lower copper prices, at the highest since August last month, stayed near the prior week’s level, government data showed.

“CFTC data suggests that the Comex copper net spec short position remains large,” Dee Perera, an analyst at Marex Spectron in London, said in a report today.

Copper for delivery in three months added 0.1 percent to $7,126 a metric ton by 10:28 a.m. on the London Metal Exchange after sliding as much as 0.5 percent. Copper for March delivery was little changed at $3.2475 a pound on the Comex in New York.

Money managers reduced their net-short position in copper to 19,316 Comex futures and options in the week ended Dec. 3, against 19,738 a week earlier and 24,067 two weeks earlier, U.S. Commodity Futures Trading Commission data show. The U.S. jobless rate fell to a five-year low of 7 percent last month as payrolls expanded by 203,000, the Labor Department said Dec. 6.

Price drops may be limited on the outlook for demand from leading copper user China. Premiums for imported copper remained near a record on demand for import financing even as officials moved to control capital inflows. The premium was at $195 a ton today, against August’s record $210, according to data provided by SMM Information & Technology Co. Copper imports into China rose in November, customs data showed yesterday.

“With monetary conditions still on the tight side, however, demand growth will likely remain modest into year end,” Sijin Cheng, an analyst at Barclays Plc, wrote in a report today.

Copper stockpiles monitored by the LME, at the lowest since February, fell for a 26th session to 405,275 tons, daily data showed. Orders to remove the metal from warehouses jumped 1.1 percent to 273,250 tons, the highest since Nov. 27.

Aluminum, tin, nickel, lead and zinc gained in London.

To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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