Copper futures hinge on Fed meeting

Confidence about continued reductions to monetary stimulus in the world's largest economy prompted copper futures to hurtle toward their top price in seven weeks on Tuesday, according to Bloomberg.

The price spike comes as the Federal Open Market Committee prepares to convene a policy meeting on Tuesday. The FOMC earlier this year and late last year opted to taper monthly asset purchases by $10 billion following each meeting. The body has made clear that it would like to close the economy-spurring program by the end of this year.

Presently standing at $55 billion per month, the stimulus program aims to strengthen the U.S. economy during the recovery from the Great Recession. Copper is sensitive to this type of economic and financial development because of its widespread use in manufacturing, construction and additional industry, all of which are gagged as metrics of growth and development. The Fed body plans to convene for two days of meetings.

"Another $10 billion tapering announcement could be bullish for the dollar, but bearish for copper," states a Tuesday email authored by chief market analyst Naeem Aslam with Ava Capital Markets Ltd. in Dublin, according to Bloomberg. "The Fed are only tapering because they believe the economy is becoming stronger, and this is a positive influence for copper in the long run."

At 9:05 a.m. on Tuesday, copper futures edged down 0.5 percent, a 0.0155-cent loss to $3.0775 per pound.

The reddish metal's performance was capped by an emboldened U.S. dollar.

Indian copper conglomerate states costs to stay high
A renowned Indian producer of the industrial metal indicated that costs and expenses linked with copper production are likely to stay high, according to Reuters.

Also recognized as the largest refiner of the reddish metal in the subcontinent, Sesa Sterlite Ltd. said costs associated with treating and refining copper during the first quarter of the year pushed up 18.5 cents per pound.

As an arm of Vednata Resources Plc,. which is owned by billionaire Anil Agarwal, Sesa Sterlite said the smelter generates 30,000 tons of copper per month. But, beginning April 26, the facility kicked off a three-plus week shutdown for maintenance purposes.

The shutdown is likely to have an impact on the facility as well as its bottom line. Roughly 50 percent of the production from the plant Tuticorin is earmarked to China, the globe's top consumer of the base metal.

Yet some producers are forecasting a strong performance for copper futures as well as healthy production of the reddish metal from Alaska to the southern tip of Argentina.

Mine production poised to shoot higher
Forbes reports the International Copper Study Group said production from mines is set to surge higher.

That increase this year is forecast to amount to 4.7 percent higher this year and 7.3 percent more next year, to amount to 18.9 million tons and 20.3 million tons, respectively.

So too is refined production of the reddish metal likely to climb. This year's generation is forecast to be as high as 6.5 percent and next year's is projected to check in at 4.3 percent.

Chinese economic performance impacts prices
But the price of copper futures is largely hinging on activity in China, which consumes an estimated 40 percent of the world's supply of the reddish metal.

China is navigating rough economic times, which Thomson Reuters GFMS said is likely to impact demand for copper as well as its price.

"More recently, concerns over Chinese economic growth and question marks over the sustainability of the copper financing trade, which has been critical in locking away some of the modest market surplus seen over 2013 and early 2014, have placed renewed pressure on prices," Thomson Reuters GFMS said, according to Forbes.