Copper Falls on Speculation Fed Will Opt to Limit Debt Purchases

Copper fell for the second time in three days on speculation that the Federal Reserve will soon start reducing economic stimulus in the U.S., the world’s second-biggest metals consumer.

Fed Bank of Chicago President Charles Evans said yesterday he “would clearly not rule” out a decision to begin reducing debt-buying of $85 billion a month in September. Fed Bank of Dallas President Richard Fisher warned investors the day before not to rely on the bond purchases. Through yesterday, copper prices dropped 13 percent this year on concern that a reduction in stimulus would slow economic expansion and metals use.

“The consensus over the past week has really coalesced around the idea that the Fed will start pulling back in September,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “There’s clearly a lot of fear of tapering in the markets right now, and it’s hard to have a strong view because of the back and forth surrounding perceptions of what central banks will do.”

Copper futures for delivery in September fell 0.1 percent to $3.1695 a pound at 11:04 a.m. on the Comex in New York, after touching $3.1285, the lowest since Aug. 1.

Stockpiles monitored by the London Metal Exchange fell for a 16th session to 601,600 metric tons, the lowest since April 12, daily exchange figures showed. Inventories shrank 8 percent last month, the most since March 2012.

On the LME, copper for delivery in three months slid 0.3 percent to $6,986 a ton ($3.17 a pound).

Aluminum, lead, tin and zinc were also lower in London, Nickel rose.

JPMorgan Chase & Co., Goldman Sachs Group Inc., the LME and Glencore Xstrata Plc were sued in the U.S. over claims they restrained aluminum supplies and drove up prices. Premiums for the metal tumbled the most in 20 months in July as lawmakers scrutinize waiting times to withdraw metal from LME warehouses and the exchange consults users on a plan to ease the backlog.

Changes in LME warehousing rules may help “increase availability of metals in the market,” said Bjarne Schieldrop, the Oslo-based chief commodity analyst at SEB AB.

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