Oct. 10 (Bloomberg) -- Copper rallied in New York for the first time in four days on signs that U.S. lawmakers may reach an agreement to increase the debt ceiling and meet its debt obligations.
House Republican leaders proposed a short-term increase in the debt ceiling that would continue the government shutdown and may reduce the prospects for a U.S. default. Copper dropped 2.1 percent in the previous three days amid concern that a congressional impasse over the budget and debt limit will hinder the U.S. recovery.
“The talks in Washington are taking precedence over everything for traders, and so you’re going to see these sorts of reversals as we get headlines like this,” Brian Booth, a senior market strategist at Long Leaf Trading Group in Chicago, said in a telephone interview. “If there’s some form of agreement, traders will feel a lot better about staying in a position for more than a few days.”
Copper futures for delivery in December added 0.5 percent to settle at $3.2485 a pound at 1:16 p.m. on the Comex in New York.
A U.S. default might “seriously damage” the world economy, the International Monetary Fund said this week.
Signs of expanding production have also eroded support for copper this month. World supply from mines will increase no less than 4 percent annually in the 2012-2016 period, Standard Bank said this week in a report, compared with less than 1 percent in four of the six years before 2012.
“Caution is the watchword,” Andrew Silver, a broker at Triland Metals Ltd. in London, said by e-mail today. “My impression from this week is that producers are nervous. They know surpluses are here and premiums will likely be pressured.”
On the London Metal Exchange, copper for delivery in three months climbed 0.6 percent to $7,145 a metric ton ($3.24 a pound).
Aluminum, nickel and zinc rose in London. Tin fell, while lead was unchanged.
--With assistance from Agnieszka Troszkiewicz in London. Editors: Thomas Galatola, Patrick McKiernan