Monday, 2 December 2013

Copper Declines Amid Signs Investors Are Shunning Raw Materials

By Agnieszka Troszkiewicz - Dec 2, 2013 4:56 AM PT

Copper fell in New York amid signs investors are shunning raw materials as data indicating the U.S. economy is improving fuels speculation the Federal Reserve will slow economic stimulus in the country.
Investors pulled a record $34.1 billion from commodity funds since the end of December, according to EPFR Global. U.S. manufacturing expanded for a sixth month in November and personal spending rose in October, also the sixth gain in a row, economists surveyed by Bloomberg said before reports this week. The Fed’s next monetary-policy meeting takes place Dec. 17-18.
“Timing of the selling highlights the fact that the commodity-trading adviser sell program is still very much active,” James Marks, head of global metals at Xconnect Trading Ltd. in London, said by e-mail today.
Copper for delivery in March lost 0.4 percent to $3.1935 a pound by 7:42 a.m. on the Comex in New York. Prices declined 2.9 percent last month, the most since June. Copper for delivery in three months fell 0.6 percent to $7,014 a metric ton on the London Metal Exchange.
The Institute for Supply Management’s U.S. factory index will come in at 55.1 for November, the survey showed. Readings above 50 indicate growth. Minutes of the prior Fed meeting released Nov. 20 signaled that officials expected an improving economy to warrant trimming debt purchases in coming months. The U.S. ranks second globally afterChina among copper consumers.
LME copper open interest, or the number of outstanding futures, is the lowest since April 2. Supply of refined metal will top demand by 330,000 tons next year, Morgan Stanley said.
“We expect copper prices to remain flat over the next five quarters,” Peter Richardson, an analyst at the bank, said in a report e-mailed today. “An improved demand outlook driven by strength in the Chinese power-infrastructure sector is expected to be more than offset by a wave of supply slated to come to market, resulting in a market surplus over 2013-14.”
Copper inventories tracked by the LME dropped for a 21st session to 420,400 tons, the lowest since Feb. 21. Orders to draw the metal from warehouses slid 1.3 percent to 262,300 tons.
Aluminum fell 0.3 percent to $1,750 a ton in London, nearing a four-year low. Lead, zinc, nickel and tin slumped.
To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net
To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net
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