Copper falls to 3-year low on recession concerns

Copper fell to the lowest in three years amid sales of industrial metals, oil and gold as the threat of a recession in the US and European economies curbs demand.

Copper added to last week’s 22 per cent drop, the biggest weekly decline since at least 1986. The US economy probably shrank at a 0.5 per cent annual rate last quarter, the second drop in a year.

“As long as the economic picture isn’t clear, investors are going to sell into any rally,’’ said Lars Steffensen, managing director of Ebullio Capital Management, which runs a $20-million commodity hedge fund. Only “a meteorite hitting earth’’ could make things worse, he said from Southend-on-Sea, England.

Copper for three-month delivery fell $130, or 3.5 per cent, to $3,640 a tonne as of 10:51 am on the London Metal Exchange. The contract earlier lost as much as 4.8 per cent to $3,590 a tonne, the lowest intraday price since September 19, 2005.

The metal has fallen 45 per cent this year as demand growth shrinks in China, the world’s biggest user. Declines on Monday pushed mining stocks lower including BHP Billiton, which owns the world’s largest copper mine, Escondida, in Chile.

Consumption in China may slow to 5 per cent this year, said Duan Shuaofu, copper division chief at the China Nonferrous Metal Industry Association, half the previous forecast.

Copper stockpiles monitored by the LME rose 0.7 per cent to 213,375 tonnes, the exchange reported on Monday, the highest since February 16 and taking this year’s gains to 8.1 per cent.

Tin, the only industrial metal that gained on Monday, rose $250, or 2.1 per cent, to $12,000 a tonne as inventories declined 11 per cent to 4,080 tonnes, the lowest since August 4, 2005.

Aluminum dropped $26, or 1.3 per cent, to $1,945 a tonne and nickel fell $500, or 5 per cent, to $9,500. Lead lost $76, or 6 per cent, to $1,195 and zinc was $60 lower at $1,105 a tonne.