Copper futures dropped for the third straight session on concern that demand will slump as U.S. lawmakers struggle to reach agreement on a debt ceiling and economies in Europe sputter.
Congressional Republicans and the White House, after last week resolving a dispute over $600 billion in tax increases and budget cuts, are gearing up for debate next month on raising the country’s $16.4 trillion borrowing limit. The Economy Ministry in Berlin may say tomorrow that German factory orders fell 1.4 percent in November, according to economists surveyed by Bloomberg.
“We just got over the budget debate in Washington, and now we’re looking at another problem to solve in the debt ceiling,” Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Florida, said in a telephone interview. “Europe has so far only provided Band-Aid solutions to its debt problem. So there’s a lot of headline risk in the markets.”
Copper futures for March delivery dropped 0.4 percent to $3.678 a pound at 1:19 p.m. on the Comex in New York. The metal fell 1.1 percent in the previous two sessions after the Federal Reserve signaled plans to end U.S. asset purchases sometime this year.
Increased spending on infrastructure projects in China will help buoy copper prices, Smith said. Reports this week may show Chinese imports and exports strengthened in December, according to economists surveyed by Bloomberg. China is the world’s biggest consumer of the metal, followed by the U.S. and Germany.
Money managers boosted wagers on rising copper prices by 6.2 percent to 15,924 Comex futures and options contracts as of Dec. 31 from a week earlier, government data showed on Jan. 4.
On the London Metal Exchange, copper for delivery in three months slipped 0.2 percent to $8,071 a metric ton ($3.66 a pound). Nickel, zinc and lead also dropped, while tin and aluminum rose.