SINGAPORE, Oct 16: London copper prices were little changed on Wednesday as the market waited to see if U.S. Lawmakers could hammer out a last-minute fiscal deal before the U.S. Government’s authority to borrow lapses on Thursday.
The latest word from Washington was that a deal between Senate leaders was not imminent, although lawmakers said agreement was close.
Earlier, a Senate aide had said Democratic and Republican leaders in the Senate could announce a deal late on Tuesday to extend the government’s borrowing authority until Feb. 7 and reopen federal agencies.
‘The chance of the U.S. Not paying its debt is virtually zero,’ said Thomas Lam, chief economist at DMG & Partners Securities in Singapore.
‘Markets are hopeful there will be some resolution in the near term. If we get that we might get some relief. But if it’s a short-term solution, then the relief will be short-term, too,’ he added.
Failure to raise the debt ceiling could have a huge hit on the U.S. Economy by forcing the U.S. To cut spending next year, with a resultant 4 percent drag on GDP knocking the U.S. Into recession, Lam said, although that was not his base case scenario.
Fitch Ratings warned on Tuesday it could cut the sovereign credit rating of the United States from AAA, citing the political brinkmanship over raising the federal debt ceiling.
Three-month copper on the London Metal Exchange was flat at $7,241 a tonne by 0319 GMT. In the previous session it finished little changed.
Copper prices are recovering from three-week lows of $7,081 a tonne reached last week, but remain down by more than 8 percent this year.
The most traded January copper contract on the Shanghai Futures Exchange was also little changed at 52,170 yuan ($8,500) a tonne.
Feedback from last week’s annual industry week in London continues to filter out to the market.
Barclays noted a slight improvement in general investor sentiment but flagged that discretionary investors remain largely sidelined.
‘Feedback from our meetings showed that investors are neutral-to-bearish on zinc and aluminium, neutral on copper, are becoming more constructive on nickel, and are bullish on lead and tin,’ it said.
Tin prices have been supported by a drop in shipments from top exporter Indonesia after new laws in August forced all trade through its domestic exchange.
The supply disruption will help propel tin price to $25,000 a tonne or higher next year, noted BNP Paribas, as the market grapples with its fifth successive year of deficit.
But the lack of supply camouflages very limp demand from the global electronics sector due in part to miniaturisation and a slowdown in demand for Chinese electronic and consumer appliances, BNP Paribas said, forecasting just 2.5 percent growth in demand next year.
Markets are looking ahead to Chinese GDP and industrial production data on Friday.
Chinese Q3 GDP growth is seen at 7.8 pct compared with a year before, up from 7.5 percent in the second quarter.
(AGENCIES)
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