Copper Falls as Investors Shift Focus to Prospects for Surplus

Copper futures fell, snapping the longest rally in two months, as investors shifted their focus to prospects for a surplus of the metal after U.S. lawmakers agreed to raise the government’s borrowing limit.

Supplies will exceed demand by about 340,000 metric tons through 2015, researcher Wood Mackenzie Ltd. said yesterday. A day earlier, Rio Tinto Group said its output of the metal this year will be higher than estimated. President Barack Obama signed into law a measure extending U.S. borrowing authority into 2014, averting a debt default.

“With the temporary agreement in Washington, copper markets can focus back on fundamentals, which appear confused,” Mark Lewon, the president of Salt Lake City-based Utah Metal Works Inc., said in an e-mail. Production figures and stockpiles outside China, the world’s biggest consumer, “suggest a good-sized surplus this year.”

Copper futures for delivery in December slumped 0.3 percent to settle at $3.297 a pound at 1:05 p.m. on the Comex in New York. The price climbed in the previous five sessions, the longest rally since mid-August.

Global supply will increase by 1 million tons next year and an additional 800,000 tons in 2015, Wood Mackenzie said. Rio Tinto’s output of mined copper surged 23 percent in the third quarter from a year earlier.

Orders to remove the metal from warehouses monitored by the London Metal Exchange slid for a fifth straight session, to 251,875 tons.

On the LME, copper for delivery in three months fell 0.4 percent to $7,230 a ton ($3.28 a pound).

Aluminum for delivery in three months dropped 0.3 percent to $1,850 a ton on the LME. Inventories rose 1.5 percent, the most since September 2012, to 5.42 million tons on inflows in the Dutch port of Vlissingen, the world’s biggest repository for the lightweight metal.

Nickel and tin also retreated. Zinc and lead gained.

Before it's here, it's on the Bloomberg Terminal.