BLBG:Copper Heads for First Monthly Drop in Four on Taper Speculation
Copper fell in London, heading for the first monthly drop since June, on speculation the Federal Reserve will start to slow economic stimulus sooner than forecast in the U.S., the second-biggest user of the metal.
The economy shows signs of “underlying strength,” the Fed said yesterday after a policy meeting ended, even as it maintained $85 billion in monthly bond purchases. The statement opens the possibility of reduced debt-buying as soon as December, Citigroup Inc. and Barclays Plc said yesterday.
“The net takeaway from the announcement was that tapering of QE might start sooner than the market had come to believe,” William Adams, head of research at Fastmarkets.com in London, said in a note today. Economists surveyed this month by Bloomberg said the Fed would wait until March to begin curbing its bond purchases.
Copper for delivery in three months lost 0.5 percent to $7,254 a metric ton by 9:50 a.m. on the London Metal Exchange after five sessions of gains. Prices slid 0.7 percent this month. Copper for delivery in December fell 0.6 percent to $3.307 a pound on the Comex in New York.
The odds that stimulus will slow in January rose to 45 percent from 25 percent before the Fed announcement, according to Citigroup.
A U.S. factory index from the Institute for Supply Management reached the highest level since April 2011 in September and construction spending increased for a fifth month in August, reports showed this month. The Copper Development Association says building generates about 40 percent of demand for the metal, used in pipes and wiring.
Copper stockpiles monitored by the LME rose for the first time since Sept. 4 to 476,150 tons, bourse data showed today. They’re still up 49 percent this year. Metal amounting to 3,375 tons was delivered in New Orleans, the biggest global repository for the metal. Orders to remove copper from warehouses dropped 1.1 percent to 291,500 tons.
Glencore Xstrata Plc, the mining company created in a $29 billion deal five months ago, said third-quarter copper output jumped 34 percent as African mines added to volumes.
Aluminum, tin, nickel, zinc and lead fell in London.
To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
