Copper lower as U.S. debt deadline looms

Copper fluctuated on Wednesday and traded mostly lower as the deadline for Republicans and Democrats to extend the nations borrowing authority drew closer. However, broad expectations for a last-minute accord limited losses. Investors also looked ahead at Friday when Chinas National Bureau of Statistics is expected to report that the Asian economy expanded at a faster pace in the third quarter compared to the preceding one.

On the Comex division of the New York Mercantile Exchange, copper futures for settlement in December fell to a session low of $3.275 per pound at 8:41 GMT, down 0.96% on the day. Days high stood at $3.314, the strongest level since October 8. The industrial metal fell by less than 0.1% on Tuesday and trimmed its weekly advance to 0.2% following Wednesdays retreat.

Copper edged lower as U.S. lawmakers failed to reach an agreement on Tuesday on raising the nations debt limit and reopening the partially shut federal government. Signs of progress in negotiations and broad expectations for a last-minute accord however limited losses. Senate majority Leader Harry Reid, a Democrat, and Minority Leader Mitch McConnell, a Republican, who began face-to-face talks on Saturday for the first time since July after negotiations between House Republicans and the White House failed, suspended talks on Tuesday while the Republican-controlled House of Representatives was discussing its own bill.

Senate leaders later resumed talks after the House scrapped a vote to extend the government’s borrowing authority through February February 7 and reopen the government until December 15. Fitch Ratings said that it could trim the U.S. sovereign credit rating down from AAA. Analysts warned that the lack of a long-term solution will just postpone the deadlock for several months.

Thomas Lam, chief economist at DMG & Partners Securities in Singapore, said for CNBC: “The chance of the U.S. not paying its debt is virtually zero. Markets are hopeful there will be some resolution in the near term. If we get that we might get some relief. But if its a short-term solution, then the relief will be short-term, too.”

The metal was well supported recently as the Euro zone’s industrial production rose by 1.0% in August, beating analysts’ forecast for a 0.6% advance. July’s reading was revised to a 1% contraction after being initially estimated at -1.5%. Year-on-year, the single-currency bloc’s industrial output declined by 2.1% from the previous period, beating projections for a 2.7% decline. July’s reading was revised upward to -1.9% from -2.1%.

On Saturday, data by the Chinese General Administration of Customs showed the nation’s copper imports rose by 18% to 457 847 tons in September from a month earlier as lower prices boosted orders. This was the highest level since March 2012. Total inbound shipments surged to 1.26 million tons in the third quarter, 21.4% above the preceding period.

Market players also awaited the release of key economic data from China on Friday. China’s National Bureau of Statistics will likely report that the country’s economy grew by 1.9% in the third quarter, up from 1.7% in the previous three months. The median forecast of 21 analysts surveyed by Reuters showed that year-on-year China’s economy has expanded by 7.8% in the third quarter, up from 7.5% in the previous period.

The national agency is also due to release the country’s retail sales which likely inched up to 13.5% in September from 13.4% in the preceding month. Industrial production is projected to have expanded by 10.1%, slightly below August’s 10.4% advance.