Copper Falls on Record China Output, Fed Tapering Speculation

Copper dropped for the first time in six days, paring a weekly gain, as record output in China spurred oversupply concerns and amid speculation on the timing of stimulus cuts by the U.S. Federal Reserve.

The contract for delivery in three months on the London Metal Exchange fell as much as 0.4 percent to $7,195 a metric ton and traded at 7,209.50 at 9:59 a.m. in Shanghai. Today’s loss reduced this week’s gain to 1.2 percent. The metal is down 9.1 percent this year.

Copper production in China, the world’s largest user, climbed to a record in November as high treatment and refining fees encouraged smelters to process more material. U.S. retail sales rose more than forecast in November, data showed yesterday, and the House approved a budget that would ease $63 billion in automatic spending cuts. The Fed will probably start reducing its $85 billion of monthly bond purchases at a Dec. 17-18 meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, up from 17 percent in a Nov. 8 poll.

“High production adds weight on the market and we may see a waning premium, even a discount, over spot copper prices next year,” said Xiong Dabiao, an analyst at Minmetals Futures Co. in Shanghai.

Copper for delivery in February on the Shanghai Futures Exchange fell 0.4 percent to 51,340 yuan ($8,454) a ton. The contract for delivery in March fell 0.2 percent to $3.289 a pound on the Comex in New York.

On the LME, zinc also fell, while tin gained. Aluminum, lead and nickel were little changed.

To contact Bloomberg News staff for this story: Alfred Cang in Shanghai at acang@bloomberg.net

To contact the editor responsible for this story: Jarrett Banks at jbanks15@bloomberg.net

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