After hitting a six-week high on Wednesday, copper dipped Thursday on concern that US lawmakers won't be able to reach a deal that staves off the "fiscal cliff," spending cuts and tax increases that are set to automatically come into effect in 2013.
Copper got a boost earlier this week on hopes that a deal could be reached to avoid the fiscal cliff and on signs that demand for copper is improving in China, the world's largest consumer of the metal.
Thomas Keller, CEO of Chile's Codelco, the world's largest copper producer, said this week that China's commitment to urbanization and industrialization should give the copper market a “healthy boost” in the coming years. Keller also said that even if China's economy only grows by a single digit going forward, “there's still a lot of tonnage adding to the demand globally," SteelGuru reported.Thursday, the rhetoric between the White House and the Republican-dominated House of Representatives suggested that it will be difficult for the two entities to reach a compromise, and investor unease put downward pressure on copper prices. Danske Bank analyst Christin Tuxen said the base metals market will be looking at the US non-farm payrolls data that comes out today. He said it will be “instrumental in showing how the labour market is doing in the United States, and that is important for the economy in general,” Reuters reported. On the London Metal Exchange, copper for three-month delivery was slightly down, at $8,061 per tonne late Thursday compared to $8,065.25 the day before. On Wednesday, copper touched $8,095.75 in London, the highest since October 19, although it didn't come near a September high of $8,422. COMEX copper for March delivery was down 1.1 percent at $3.6455 per pound in mid-afternoon trade in New York.