Copper futures fell the most in five weeks in New York as U.S. politicians remained deadlocked over raising the government’s borrowing limit, fueling concern that the country will not meet its debt obligations.
A default could “seriously damage” the world economy, the International Monetary Fund said yesterday as it lowered global growth estimates for this year and next. The Treasury Department has said steps to avoid breaching the debt ceiling will be exhausted by Oct. 17. Many government operations have been closed since this month began.
“With the shutdown causing a lot of discomfort in the markets, metals are having a lot of trouble garnering much interest from investors,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Copper is going to have a hard time in this environment, and we’ll need to see some sort of policy movement to assuage investors.”
Copper futures for delivery in December tumbled 1.9 percent to settle at $3.231 a pound at 1:18 p.m. on the Comex in New York, the biggest drop since Sept. 4. The metal has fallen for three straight days.
The world economy will expand 2.9 percent this year and 3.6 percent in 2014, the IMF said. The lender lowered its projection for growth this year in emerging-market nations by 0.5 percentage point to 4.5 percent.
“The IMF growth downgrade yesterday, especially in EM countries, also keeps a lid on prices,” said Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen.
Codelco, the world’s biggest copper miner, plans to invest $4 billion to $5 billion annually in the next five years to increase its yearly output to 2 million metric tons as soon as 2015, Chief Executive Officer Thomas Keller said in an interview.
On the London Metal Exchange, copper for delivery in three months declined 1.9 percent to $7,099.50 a ton ($3.22 a pound).
Aluminum, lead, nickel, tin and fell in London. Zinc rose.