Copper fell to the lowest in six weeks in New York as Federal Reserve policy makers begin a meeting that may indicate when the central bank will start curbing debt purchases intended to stoke the U.S. economy.
A two-day meeting of the Federal Open Market Committee starts today. The Fed is buying $85 billion of debt a month. Housing starts climbed 6.8 percent to a 914,000 annualized rate in May, a government report showed today, trailing the 950,000 median forecast in a Bloomberg survey of economists.
“People are really waiting to see what the Fed determines as far as tapering their bond purchases,” Adam Klopfenstein, a senior market strategist at Archer Financial Inc. in Chicago, said in a telephone interview. “The housing data is showing that, while we’ve had some traction, future gains from these levels are going to be harder to come by.”
Copper futures for delivery in September retreated 1.3 percent to settle at $3.1675 a pound at 1:16 p.m. on the Comex in New York. The metal touched $3.151, the lowest for a most-active contract since May 3.
Construction generates about 40 percent of demand, according to the Copper Development Association.
Production of refined copper will exceed demand by 127,000 metric tons this year, according to RBC Capital Markets LLC. New projects will add an estimated 1 million tons of capacity, or 5 percent of global mine supply, in the coming year, according to Macquarie Group Ltd.
“There is downside risk to both our copper demand and price forecasts,” Fraser Phillips, an analyst at RBC in Toronto, said in a report e-mailed today. “Without an improvement in the outlook for global economic growth, there is a risk that the copper market surplus could be much larger than we currently forecast in 2013.”
On the London Metal Exchange, copper for delivery in three months fell 1.1 percent to $7,005 a ton ($3.18 a pound).
Aluminum, lead, nickel and tin dropped in London, while zinc was unchanged.