Copper Declines in London as Slower Economic Growth Curbs Usage

Copper fell in London, reversing its biggest one-day gain in more than a month, as slower economic growth in China and recessions in the U.S., Europe and Japan curbed demand for industrial metals.

Exports may have contracted last month and industrial output slowed in China, the world's largest consumer of all industrial metals, according to Fan Gang, an adviser to the nation's central bank. Construction, which accounts for about 30 percent of demand for industrial metals, slumped worldwide, said Michael Widmer, an analyst at BNP Paribas SA, in a report yesterday.

"Not until there is a real turnaround in the physical market, metals will continue to get sold off," Leon Westgate, an analyst at Standard Bank Plc in London, said by phone. "Tightness of credit is constraining what people want to do."

Copper for delivery in three months lost $187, or 5.6 percent, to $3,128 a ton as of 11:28 a.m. on the London Metal Exchange, extending this year’s loss to 53 percent. The contract rallied 8.7 percent yesterday, the biggest gain since Oct. 29.

The slump in prices is forcing producers to cut output. Sumitomo Metal Mining Co. and Mitsubishi Materials Corp, Japan's second, and third-largest copper refiners, said they will probably reduce production because of the economic downturn.

LME-monitored copper stockpiles added 1,850 tons, or 0.6 percent, to 302,575 tons, the exchange said, the highest since February 2004.

Tin producers are also cutting output. Yunnan Tin Co., the world's biggest producer of the metal, said it will suspend production for at least a month.

Tin Production

The Chinese company will likely produce about 50,000 tons this year, compared with earlier forecasts of 62,000 tons, Matthew Zhou, assistant to the company's general manager, said today by phone from Yunnan. Tin advanced $50 to $11,700 a ton.

Zinc rose $7 to $1,110 a ton after Stockholm-based Boliden AB, Europe's second-largest miner of the metal, said it started cutting production by 60,000 tons, or about 13 percent of last year's output of 460,000 tons.

Among other LME-traded metals, aluminum dropped $26.50 to $1,494 a ton, lead lost $45 to $965 a ton and nickel fell $175, or 1.9 percent, to $9,150 a ton.

information from www.bloomberg.com