Copper at 5-day low on concerns about China, FOMC
London (Sept 15) Copper futures were lower in London on Tuesday amid persistent worries about China's cooling economy and risk-aversion in the run-up to the U.S. Federal Open Market Committee meeting this week, factors that are putting pressure on demand.
The London Metal Exchange's three-month copper contract was down 0.7% at $5,270.50 a metric ton, declining for the third session in a row.
The industrial metal fell on Monday after data released by the Chinese National Bureau of Statistics over the weekend showed that factory production and fixed-asset investment was below analysts' expectations in August. This reignited fears about the state of the top metal consumer's economy.
Additionally, the FOMC begins its two-day meeting on Wednesday, which could potentially see it raise interest rates for the first time in almost a decade. This would strengthen the dollar and negatively affect dollar-denominated commodities, such as copper.
Going forward, the copper market is largely expected to tread water until the timing of a U.S. rate rise is decided.
"In the short term, we expect the markets to consolidate until after the Fed has announced its decision," said William Adams, head of research at Fastmarkets.
Some market participants think recent copper supply cuts, such as Glencore PLC's (GLEN.LN) decision to take 400,000 tons offline over the next 18 months, could help arrest the price slide.
"Glencore's move to shut down production may provide some base support," said Deutsche Bank.
Among other base metals, aluminum was down 1.4% at $1,598 a ton, zinc was down 2.5% at $1,709.50 a ton, nickel was down 1.2% at $9,800 a ton, lead was down 1% at $1,658 a ton and tin was down 0.1% at $15,580 a ton.