Copper up on news of debt ceiling deal

COPPER prices rose yesterday on signs US politicians would agree a last-minute deal to prevent federal debt default.

US Senate leaders announced a bipartisan compromise to raise the debt limit and reopen the government. The deal must still be voted on by the Senate and the House of Representatives.

Benchmark three-month copper on the London Metal Exchange (LME) was not traded in closing rings, but was last bid up 0.3% at $7,260 per tonne.

“There’s a bit of a yo-yo going on ahead of the final decision,” said Nic Brown, head of commodities research at Natixis, as copper prices moved between positive and negative territory amid the political brinkmanship. “A deal of any kind will be taken positively,” Mr Brown said.

Copper prices are tentatively recovering from three-week lows of $7,081 a tonne reached last week, although they remain down by more than 8% this year over concerns about a surplus. The improved outlook on the US situation helped the dollar climb to a three-week high against the

The market genuinely doesn’t think the politicians would be reckless enough to trigger a full-scale default

yen, weighing on copper. LME benchmark metals are priced in dollars and become more expensive to holders of other currencies when the US unit rises.

“To use the word confident is wrong, but the market genuinely doesn’t think the politicians would be reckless enough to trigger a full-scale default,” VTB Capital analyst Wiktor Bielski said.

“Less copper is being ordered for shipment from Asian LME warehouses in particular,” said Commerzbank analyst Daniel Briesemann. “If this trend were to continue, this could preclude any significant rise in prices in the short term.”

Aluminium, tin and zinc retreated in London. Lead and nickel rose. Yesterday was the third Wednesday of the month, when LME rules oblige holders of futures contracts to declare whether they plan to take delivery.