Copper fell on Wednesday as producers reported higher-than-expected output, spurring concern over ample supply. Stronger dollar also weighed on prices.
On the Comex division of the New York Mercantile Exchange, copper futures for September delivery hit a new daily low at $3.137 a pound at 9:15 GMT, down 1.54% on the day. Days high stood at $3.198 during late Asian trading. The industrial metal has declined 0.5% so far this week after gaining 3% during the preceding two following Bernankes statement last week the U.S. economy is still in need of Feds monetary easing program.
Copper fell on Wednesday as large producers reported higher than anticipated copper output, indicating ample supply. Rio Tinto Group said its mined copper production rose by 10% for the quarter to 146 200 tons, above projections of 115 00 tons. BHP Billiton Ltd., the worlds third largest producer, said output in the three months ending June totaled 333 200 tons, surpassing expectations for a 333 200 tons reading.
Wang Na, an analyst at Guolian Futures Co., said for Bloomberg: “Because the general expectation is rising supplies and a surplus market this year, copper prices will continue to be weighed down unless there’s unexpected strong positive news. Bernanke’s comments today may offer short-term direction.”
Meanwhile, the metal was pressured by a stronger dollar. The dollar index, which tracks the greenbacks performance against six major counterparts, traded at 82.71 at 9:40 GMT, up 0.10% on the day. The contract for September settlement ranged between days high and low of 82.91 and 82.59. Futures settled around 0.6% lower yesterday, extending this weeks decline to 0.5%.
Investors are keeping a close eye on Ben Bernankes two-day testimony before Congress on Wednesday and Thursday as different Fed presidents stated recently diverse opinions about the future of Quantitative Easing. St. Louis Federal Reserve President James Bullard said on July 12 the U.S. central bank shouldn’t taper its monetary easing program until inflation reaches its target.
Meanwhile, Philadelphia Fed President Charles Plosser said the same day exactly the opposite. He stated Fed should trim its bond purchasing in September and bring it to an end by the end of the year. Yesterday, Kansas City Fed President Esther George said the central bank should start reducing its bond purchasing program soon and bring it to an end by mid-2014. “The important thing is to start the process,” George said. She also noted that the economy would benefit from higher interest rates.
Apart from Bernanke’s testimony, market players will also be keeping an eye on the remaining U.S. data for the week to gauge the U.S. economy’s recovery pace. On Wednesday, Building Permits and Housing starts will provide data about the U.S. construction sector. The Labor Department will release Initial Jobless Claims on Thursday. The number of people who have filed for unemployment payments is expected to have dropped by 20 000 to 340 000 after last week an unexpected surge to 360 000 supported Bernanke’s statement that the U.S. labor market is still fragile
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