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Copper slumps on Fed stimulus view, China loan data supports

Published 04/11/2013, 05:07 AM
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Investing.com - Copper futures edged lower during European morning hours on Thursday, after minutes of the Federal Reserve’s March meeting showed that several policymakers favor an early end to the bank’s asset purchase program.

On the Comex division of the New York Mercantile Exchange, copper futures for May delivery traded at USD3.406 a pound during European morning trade, down 0.4% on the day.

New York-traded copper prices fell by as much as 0.6% earlier in the session to hit a daily low of USD3.396 a pound.

Copper prices extended losses from the previous session, when minutes from the Fed’s March 19-20 meeting showed that a number of FOMC participants saw QE tapering around midyear, while others believed it would probably be appropriate to slow purchases later in the year and to stop them by year-end.

One member wanted to slow the bond purchases immediately, while two members indicated that the purchases might well continue at the current pace at least through the end of the year.

Meanwhile, U.S. President Barack Obama unveiled a USD3.77 trillion budget on Wednesday that proposed new taxes on the wealthy along with cuts to benefit programs.

After proposing the budget, Obama also set in motion the next USD109 billion of the reductions to military and domestic programs for the year starting on October 1.

The U.S. is second behind China in global copper demand, and construction and manufacturing are both key drivers of copper use.

Losses were limited after data released earlier showed that China saw a large increase in bank lending in March, easing concerns over tight liquidity conditions in the world’s largest consumer of the industrial metal.

Official trade data released Wednesday showed that China imported 319,603 metric tons of refined metal, alloy and products last month, compared with 298,102 tons in February and 462,182 tons a year earlier.

Elsewhere on the Comex, gold for June delivery shed 0.3% to trade at USD1,554.75 a troy ounce, while silver for May delivery lost 1% to trade at USD27.38 a troy ounce.

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