BLBG:Copper Reaches Three-Month High as Fed Maintains Asset Purchases
Copper reached a three-month high in London after the Federal Reserve said it will keep pumping $85 billion a month into the economy in the U.S., the world’s second-biggest consumer of the metal.
Fed policy makers gave no sign of when monthly securities purchases may stop in a statement released yesterday after a meeting ended. The central bank also maintained a pledge to hold interest rates near zero. The U.S. economy unexpectedly came to a standstill in the fourth quarter as defense spending plunged the most in 40 years, figures showed yesterday.
“It is definitely the case that bad news in the U.S. is good news,” Nic Brown, head of commodities research at Natixis SA in London, said by phone today. “It means U.S. monetary policy will remain ultra-accommodative. While the economy looks weak, the Fed will just remain on hold.”
Copper for delivery in three months added 0.5 percent to $8,270 a metric ton by 10:33 a.m. on the London Metal Exchange. Prices reached $8,291.25, the highest since Oct. 5, and are up 4.3 percent this month. Copper for March delivery on the Comex in New York rose 0.4 percent to $3.7645 a pound.
Reports due tomorrow will show hiring in the U.S. sped up this month and construction spending climbed for an eighth month in nine in December, Bloomberg surveys of economists showed. The Copper Development Association says building generates about 40 percent of demand for the metal, used in pipes and wiring.
Rio Tinto Group, the world’s second-biggest mining company, may temporarily halt work at Oyu Tolgoi in Mongolia, the world’s biggest copper project under construction, according to two people familiar with the plans. Rio is discussing the suspension to protest Mongolian government demands for a bigger stake in the project and new mining royalty rates, they said.
Copper inventories monitored by the LME rose 0.1 percent to 371,750 tons, daily exchange figures showed, capping a fourth monthly increase. Orders to withdraw the metal from warehouses dropped 4.8 percent to 36,750 tons, the lowest since Dec. 12, and slid 29 percent this month, the most since May.
Nickel for delivery in three months on the LME, at the highest level since Oct. 5, gained as much as 1.1 percent. Aluminum, lead, zinc and tin rose.
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
