Aug. 19 (Bloomberg) -- Copper futures posted the biggest drop in almost three weeks as concern that the Federal Reserve will scale back U.S. monetary stimulus clouded prospects for metal demand.
Minutes of July’s Fed policy meeting, due on Aug. 21, may give details of deliberations on reducing bond purchases that were intended to boost the U.S. economy. The central bank probably will reduce fiscal stimulus next month, according to 65 percent of economists surveyed by Bloomberg. The U.S. is the world’s second-biggest copper consumer.
“We think that despite weaker U.S. numbers we have been seeing of late, the Fed will indeed start to taper in September,” Edward Meir, an analyst at INTL FCStone in New York, said in a report. “The action will likely result in a stronger dollar and a rollback in many commodity prices, including base metals.”
Copper futures for December delivery slumped 0.9 percent to settle at $3.336 a pound at 1:15 p.m. on the Comex in New York, the biggest drop for a most-active contract since July 30. On Aug. 16, the price reached $3.3835, the highest since June 5.
The metal has dropped 8.7 percent this year amid concern that demand will ebb in China, the biggest consumer. Last week, copper inventories tracked by the Shanghai Futures Exchange rose from an 11-month low.
“Tapering is still in the air, and real Chinese end use of copper doesn’t seem to be that strong,” David Wilson, a London-based analyst at Citigroup Inc., said in an e-mail.
On the London Metal Exchange, copper for delivery in three months fell 1.3 percent to $7,306 a metric ton ($3.31 a pound)
Aluminum dropped 1.5 percent to $1,915 a ton in London, the largest decline since July 26. United Co. Rusal, the largest producer, said today it will reduce output further this year after reporting a second-quarter loss.
Zinc, nickel and tin fell on the LME, while lead climbed less than 0.1 percent.
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