Copper fell on Thursday as the U.S. government shutdown entered a third day and threatened to impact the economic growth if it extends into next week. Larger than expected expansion of Chinas service sector however limited losses.
On the Comex division of the New York Mercantile Exchange, copper futures for delivery in December fell by 0.50% to $3.300 per pound at 11:38 GMT. Prices held in range between days high and low of $3.325 and $3.298 a pound respectively. The industrial metal rose by 1.2% on Wednesday but extended its weekly decline to nearly 0.7% after falling on Thursday.
The U.S. federal government shutdown continued for a third day after President Barack Obama failed to break through the budget talks impasse on Wednesday at a meeting with leaders of the Republicans and Democrats. Investors however expected an exit of the deadlock in the near future, limiting raw materials losses. More worries are to come if the shutdown extends into next week.
Mark Lewon, president of Salt Lake City-based Utah Metal Works Inc., said for Bloomberg: “The metal is going to sit in a tight trading range until the political standoff in Washington gets taken care of one way or another. The potential remains for copper to drop if the uncertainty does not get lifted.”
Democrats and Republicans still haven’t agreed over raising the nation’s debt limit, which would render the U.S. Treasury Department unable to borrow around October 17. According to the Congressional Budget Office, the U.S. won’t have enough money to pay all of its bills at some point between October 22 and October 31. Moody’s Investors Service warned that a failure to raise the debt ceiling would have a much worse impact on the financial markets than a government shutdown.
Losses however remained capped after a report by Chinas National Bureau of Statistics showed that the Asian countrys service sector expanded at the fastest pace in six months. Chinese Non-Manufacturing PMI rose to 55.4 in September, surpassing the preceding months 53.9. News regarding the strength of the Chinese economy have a strong influence on copper pricing as the countrys vast industrial sector accounts for around 40% of global copper consumption.