BLBG: Copper May Drop as Slowing U.S. Growth Concern Outweighs Strike
Copper may decline as concern about slowing U.S. economic growth amid an impasse on raising its debt ceiling outweighed the prospects of tight supplies after BHP Billiton Ltd. (BHP) declared force majeure at its Escondida mine.
The metal for three-month delivery was little changed at $9,775.25 a metric ton on the London Metal Exchange at 11:32 a.m. Tokyo time after earlier dropping as much as 0.3 percent. October-delivery copper on the Shanghai Futures Exchange declined 0.3 percent to 72,610 yuan ($11,272) a ton.
House Speaker John Boehner revised his plan to raise the U.S. debt ceiling as he gained support among fellow Republicans for a proposal which Senate Democrats said will not pass their chamber. The Federal Reserve said in its Beige Book survey yesterday the U.S. economy expanded at a slower pace in more parts of the country since the beginning of June, with figures due tomorrow forecast to show growth last quarter was at a 1.8 percent annual rate, the slowest pace in a year.
“The market is just focusing on the U.S. and a lot of investors are staying on the sidelines because they don’t know what’s going to happen in terms of the U.S. data,” Natalie Robertson, an analyst at Australia & New Zealand Banking Group Ltd. (ANZ), said from Melbourne.
The MSCI Asia Pacific Index sank as much as 1.1 percent, falling for a second day. Crude for September delivery fell as much as 0.9 percent in New York, extending yesterday’s 2.2 percent drop.
BHP declared force majeure on shipments from Chile’s Escondida copper mine, the world’s largest, as a strike stretched into a seventh day with workers threatening to take control of the site. Force majeure is a legal clause invoked when companies can’t meet supply obligations because of circumstances beyond their control.
Supportive
“Certainly it’s going to be supportive for copper, but at the moment the market is reacting more to currency moves and the U.S. data,” Robertson said. “The strike at Escondida increases concern over tight copper supply.”
Aluminum was up 0.4 percent at $2,654.75 a ton and and lead climbed 0.4 percent to $2,700, while zinc fell 0.4 percent to $2,512 a ton after reaching $2,539.50 yesterday, the highest price since April 11. Nickel dropped 0.4 percent to $24,300 a ton. Tin was untraded.
To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
