By Chris Kelly
NEW YORK (Reuters) – Copper prices in New York extended gains to new one-month highs in after hours trade on Wednesday after minutes of the most recent Federal Reserve policy meeting indicated the central bank was likely to further ease monetary policy “fairly soon” unless the economy improves.
“Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery,” the Fed said in minutes to its July 31-August 1 meeting.
“For the most part, the minutes really show that the Fed continues their wait-and-see approach to deciding whether or not they are going to ease,” said Adam Sarhan, chief executive of Sarhan Capital.
“If the Fed really has the intention of making a move sooner rather than later, we’ll see it either in Jackson Hole, or soon thereafter,” he said referring to the Federal Reserve Bank of Kansas City’s meeting in Wyoming on August 31.
COMEX copper for September delivery climbed to a late-session peak at $3.48 per lb, its priciest level since July 20, and more than 2-1/2 cents above its earlier settlement price of $3.4545.
COMEX copper volumes stood at 58,000 lots in late New York business, more than a third above the 30-day average, according to preliminary Thomson Reuters data.
At the London Metal Exchange (LME), three-month copper ended off $5 at $7,605 a tonne, after touching a one-month high at $7,648.
That weakness stemmed from a broader reduction of risk after Japan said its exports slumped the most in six months in July as shipments to Europe and China fell.
But investors were encouraged by U.S. housing data that offered further signs of a modest recovery in the beaten down sector and a decision by the world’s largest miner BHP Billiton to hold off on big projects reflected copper’s tight supply base.
“U.S. data has been one source of upside surprises. It has been a bit more supportive for the metals over the last few months compared with data from Europe and China,” Gayle Berry, an analyst at Barclays Capital, said.
“Given how negative market sentiment is towards global growth generally, any positive data is enough to lend a bit of support to (metals) prices.”
BHP Billiton (BHP.AX) (BLT.L) said it would delay its planned $20 billion Olympic Dam copper expansion and would approve no major projects in the year to June 2013 as it battles escalating capital costs.
“It’s not only them … markets are thinking that if BHP is saying this, who is next,” Bart Melek, head commodity strategist with TD Bank Financial Group said.
Dan Brebner, an analyst at Deutsche Bank said the company’s decision was a “longer-term positive” for the metal markets.
“But I think it reflects not only caution by the mining companies but also their difficulty in seeing how commodities will perform or how metals markets will evolve over the next couple of years,” he said.
Growing speculation that the European Central Bank will soon take action to tackle the debt crisis that has blighted major economies encouraged investors, but they were still wary after previous promises failed to live up to expectations.
Greek Prime Minister Antonis Samaras started a European charm offensive with an appeal to Germans for more time to meet Athens’ borrowing obligations, but he may struggle to make his case in a series of meetings this week with EU leaders.
(Additional reporting by Susan Thomas, Charlotte East and Harpreet Bhal in London, Melanie Burton in Singapore; editing by Jane Baird, Marguerita Choy and Sofina Mirza-Reid)