Copper fell to a four-week low on speculation that U.S. lawmakers will fail to agree on budget cuts and that Europe’s debt crisis will send the region’s economy into a recession.
In the U.S., a bipartisan congressional supercommittee likely will say today it can’t reach agreement on savings, a Democratic aide said. Germany’s Finance Ministry said the country’s expansion has gotten “noticeably slower.” Japan’s exports fell for the first time in three months. The U.S. and Germany are the world’s largest copper consumers after China.
“Headwinds to prices persist across all cyclical metals,” Michael Widmer, the head of metals research at Bank of America Merrill Lynch in London, said today in a report. “Considering ongoing uncertainties about the fiscal health of Europe and the U.S., we believe that these headwinds are unlikely to dissipate in the short run.”
Copper futures for March delivery dropped 3 percent to settle at $3.3195 a pound at 1:18 p.m. on the Comex in New York. Earlier, the price touched $3.2885, the lowest for a most-active contract since Oct. 24. The metal declined 7.7 percent in the previous three weeks.
The world economic situation is “extremely severe,” Chinese Vice Premier Wang Qishan said, according to the official Xinhua News Agency. Wang is certain that a global economic recession triggered by the financial crisis will be long-term, Xinhua reported.
On the London Metal Exchange, copper for delivery in three months fell 2.9 percent to $7,310 metric ton ($3.32 a pound).
Zinc, lead, aluminum and tin fell in London. Nickel rose.