Copper remains steady but low ahead of Fed meeting

Copper remained mostly unchanged on Wednesday after hitting a one-and-a-half month low yesterday as concerns arose Fed might scale back its monetary stimulus after one of the next FOMC meetings. Grim demand outlook from the industrial metals top consumer, China, also keeps weighing on prices.

On the Comex division of the New York Mercantile Exchange, copper futures for July delivery traded at $3.153 a pound at 11:14 GMT, down 0.05% for the day. Prices ranged between days high at $3.174 and low of $3.148 per pound. Copper fell to $3.139 a pound on Tuesday, the weakest level since May 3, on concerns the Federal Reserve could scale down its bond purchases after a relatively positive batch of U.S. data was published.

Core CPI, which excludes the more volatile energy and food prices, rose only by 0.2% compared to 0.1% in April and met projections. On an annual basis Core Consumer Price Index also met expectations and remained the same compared to May 2012 at 1.7%. CPI for May was even lower than anticipated and stood at 0.1%, below forecasts for a 0.2% increase.

A separate report showed the Housing Starts indicator was below projections of 0.950 million gain, but standing at 0.914 million it outperformed April’s 0.856 million reading. Building Permits stood at 0.974 million, below projections of 0.977 million and below last month’s revised reading of 1.005 million.

Copper has also been pushed down recently as the World Bank cut its global economic growth forecast to 2.2% this year, less than the previous projections of 2.4% in January. Gross Domestic Product in the European Union will contract by 0.6%, while the U.S. and Japan will show improvement, the World Bank said.

Chinas economy, which accounts for 40% of the metals consumption, is also expected to grow less than anticipated. The World Bank reduced its forecast for the nation’s economic growth to 7.7%, down from 8.4%. This comes after during the last week of May the IMF cut its economy growth forecast for China to 7.75%, down from 8%. The Organisation for Economic Co-operation and Development (OECD) also trimmed its expectations to 7.8% from 8%. Chinese leaders made statements in May they will tolerate a slower, but more ecological friendly expansion, boosting concern for commodities demand.

Chinas next economic data to be released is due tomorrow. That will be the preliminary HSBC Purchasing Managers Index (PMI), which has strong influence on copper prices as the metal is widely used in Chinas industrial production.