Copper Drops as Syria Attacks Fueling Concern Economy Will SlowJoe Richter and Maria Kolesnikova
Copper futures fell for the second time in three days amid mounting speculation that an American-led strike against Syria would hurt economic growth by boosting energy costs.
U.S. and U.K. officials suspect Syrian President Bashar al-Assad’s forces are responsible for chemical attacks near Damascus that opposition groups say killed more than 1,300 people. Crude-oil futures rallied to a two-year high on concern that an escalation in fighting will disrupt Middle East supply. Copper prices before this week were up 7.6 percent this month on signs of improving economic growth and lower inventories.
“The increase in geopolitical risk is manifesting itself in higher oil prices, and that’s all very negative for commodities,” Edward Meir, an analyst at INTL FCStone in New York, said in a telephone interview. “Those concerns are feeding back into metals prices.”
Copper futures for delivery in December slumped 0.7 percent to settle at $3.311 a pound at 1:15 p.m. on the Comex in New York. On the London Metal Exchange, copper for delivery in three months fell 0.3 percent to $7,290 a metric ton ($3.31 a pound).
“Higher oil prices could set up a vicious spiral” of slowing economic growth and falling metals demand, Meir said. “It’s kicking up concerns over emerging markets, which are big oil importers.”
Prices also slid after a private report showed fewer Americans signed contracts to buy previously owned homes in July, a sign that rising mortgage rates are starting to slow momentum in the housing market. Builders are the biggest copper users in the U.S, the world’s top metals consumer after China.
On the LME, nickel, aluminum, tin, lead and zinc also dropped.