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Copper hit a seven-week low on Thursday after the Fed announced it will be cutting back its bond-buying program and preliminary data from China showed a greater risk of slowdown from copper’s number-one consumer.
The rug was pulled out from under the commodities market following the FOMC meeting, which saw gold crash below the $1,300 mark and silver tumble below $20. Copper was also hit hard by the Fed’s announcement “as expectations for monetary tightening crushed hopes for a widespread revival in the U.S. housing market,” RBC Capital Markets told its clients.
Adding fuel to copper’s fire was the preliminary China Manufacturing Purchasing Managers’ Index, which fell to a nine-month low in June. The signs that China is headed for a sharper second-quarter slowdown spell bad news for copper and other industrial metals. China accounts for roughly 40 percent of global copper consumption, and a slowdown of its economy undoubtedly will have a huge impact on the red metal. Should China release even a modestly positive report, that could have the reverse effect and send prices higher, Jason Schenker, president of Prestige Economics, told Reuters.
Benchmark three-month copper was down more than 2 percent, to $6,750 per tonne in London, the lowest level for copper in seven weeks. Copper futures are down 16 percent so far in 2013, due in large part to China’s economic troubles.
Company news
Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO) will not be starting shipments of copper concentrate from Oyu Tolgoi in Mongolia on Friday at the request of the Mongolian government.
“Oyu Tolgoi is ready to start its first shipments of copper concentrate from its Mongolian mine and all necessary permits to do so have been received from relevant authorities,” a Rio Tinto representative stated. “However, plans to start shipping on Friday 21 June have been postponed at the request of the Government of Mongolia.”
So far in June that is the second instance of the start of shipments being deferred.
Nevada Copper (TSX:NCU) announced drill results from its wholly owned Pumpkin Hollow property in Nevada. Holes drilled on the western boundary of the North Deposit intersected multiple zones of mineralization totaling 112.2 meters at an average of 0.92-percent copper. Hole NC13-05 intersected the largest zone at 13.7 meters of a true thickness at an average of 1.45-percent copper.
Nevsun (TSX:NSU) completed construction of the copper flotation circuit at its Bisha mine in Eritrea. The project was completed on time and will be under budget.
Sama Resources (TSXV:SME) recently intersected a 4.5-meter, semi-massive lens grading 1.05-percent nickel, 0.89-percent copper and 1.62 grams per tonne palladium at the Samapleu Extension, the company’s nickel-copper deposit in Côte d’Ivoire, West Africa.
Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any company mentioned in this article.
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