Copper drops to lowest since December '05

Copper tumbled to the lowest price since December 2005 on speculation that the world economy is headed for a recession that will reduce demand for metals.

China, the biggest contributor to global growth, expanded at the slowest pace in five years in the third quarter, a report showed yesterday. U.S. lawmakers and officials moved toward forging a second fiscal-stimulus package to stem the economic decline. Before on Tuesday, copper had fallen 30 percent this year on signs of declining demand.

“Economic conditions have weakened dramatically in recent weeks and there is significant uncertainty about the near-term price outlook,”' Freeport-McMoRan Copper & Gold Inc., the world's biggest publicly-traded copper miner, said on Tuesday in a statement.

 

Copper futures for December delivery fell 10.65 cents, or 5 per cent, to $2.01 a pound on the Comex division of the New York Mercantile Exchange. Earlier, the price dropped to $2, the lowest for a most-active contract since December 21, 2005. The metal touched a record $4.2605 on May 5.

Copper's slump “is attributable to the fact that the global slowdown is now spreading to China,'' Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said in a report on Tuesday.

Chinese gross-domestic product rose 9 percent in the third quarter from a year earlier, the weakest quarter since 2003, the statistics bureau said in Beijing yesterday. The Asian country is the world's biggest metals user.

On the London Metal Exchange, copper for delivery in three months dropped $230, or 4.9 percent, to $4,490 a metric ton ($2.04 a pound).