Copper snapped a four-day rally in London after consumer credit in the US, copper’s second- largest user, plunged more than five times as much as forecast, casting doubt on the strength of the economic recovery.
Credit declined for a sixth month, the longest run of declines since 1991, as US banks restrict lending and job losses make Americans reluctant to borrow. The MSCI World Index of shares also dropped for the first time in five days before the release of the Federal Reserve’s Beige Book business survey.
“The consumer is very cautious, traumatised both by imploding equity and housing prices, as well as legitimate fears about losing employment,” Edward Meir, a metals analyst at MF Global, said. On demand for metals, “we do expect a modest pullback over the September-October time.”
Copper for three-month delivery fell $35, or 0.5 percent, to $6,440 a tonne on the London Metal Exchange by 10.21 am in London. Futures for December delivery shed 1.7 per cent to $2.94 a pound in electronic trading on the New York Mercantile Exchange’s Comex division.
Consumer credit in the US fell a record $21.6 billion, or 10 per cent at an annual rate, to $2.5 trillion, according to a Federal Reserve report released on Tuesday in Washington.
Copper prices more than doubled this year on record imports in the first half from China, the world’s largest consumer. The LME Index of six metals is up 73 per cent.
Among other LME metals for three-month delivery, lead fell $1, or 0.1 per cent, to $2,454 a tonne. Tin fell 1.1 per cent to $14,720 a tonne.