SINGAPORE, Sept 25: London copper edged up on Wednesday on steady buying from top consumer China, but concerns about supply pressures and uncertainty on the U.S. Fiscal outlook capped gains.
Copper prices have lost steam after hitting their loftiest in nearly four weeks on Friday in the wake of the Federal Reserve’s surprise decision to maintain its massive economic stimulus for now.
This has eroded confidence in the U.S. Recovery, casting a shadow over prospects for metals demand, said Jonathan Barratt, chief executive of Sydney-based commodity research firm Barratt’s Bulletin.
‘Uncertainty over the fiscal side of the U.S. Economy has been stopping people from taking large positions…And making decisions which suggests that economic numbers are going to be softer this month,’ he said.
‘Also, the copper market is well supplied, so I don’t see much momentum to get it to move out of range,’ he added.
Three-month copper on the London Metal Exchange was up 0.31 percent to $7,170 a tonne by 0310 GMT, after dropping 1.4 percent the session before.
Copper hit its lowest in four sessions on Tuesday at $7,117.25 a tonne. That was down from a near four-week high of $7,368 a tonne struck last week.
London copper has traded in a broader $7,000-$7,500 band since early August.
In China, physical demand remained healthy, with premiums for metal held in bonded zones holding in a $170-$200 range, according to China based price provider Shmet. (http://www.Shmet.Com/)
The most-traded December copper contract on the Shanghai Futures Exchange slipped 0.37 percent to 51,750 yuan ($8,500) a tonne on Wednesday.
Worries about when Fed tapering may commence and also the U.S. Debt ceiling continues to sway the direction of metals.
An influential Fed policymaker said he ‘certainty wouldn’t want to rule out’ a reduction in the U.S. Central bank’s bond-buying programme later this year, adding the Fed expected slower economic growth now than it did in June.
U.S. Home prices slowed their rate of gains in July and a dip in consumer confidence this month underscored the potential for higher borrowing costs and a sluggish economy to dent a housing market recovery.
Also mounting evidence of abundant supply continues to overhang the market.
Newmont Mining Corp is open to adding more copper production to its core gold business, the company’s CEO said on Tuesday, as the biggest U.S. Gold miner, along with its peers, seeks to revamp operations in a tough environment.
BHP Billiton , the world’s biggest mining company, on Wednesday said global commodities markets were being undermined by rising supplies of raw materials but said that for copper, market conditions over time should become more influenced by resource decline.
It also said it expected overcapacity in the aluminium and nickel industries to persist.
(AGENCIES)
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