BLBG: Copper Tumbles Below $2 a Pound to Lowest Since December 2005
By Millie Munshi
Oct. 21 (Bloomberg) -- Copper tumbled below $2 a pound for the first time 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 today, copper had fallen 30 percent this year on signs of declining demand.
``It's very significant to see copper come under $2,'' said Ron Goodis, futures trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. ``People are wondering, `How did it fall so far so fast?' It's easy. With this economy, it doesn't matter what the price is, people don't want copper.''
Copper futures for December delivery fell 10.9 cents, or 5.1 percent, to $2.0075 a pound at 9:57 a.m. on the Comex division of the New York Mercantile Exchange. Earlier, the price dropped to $1.992, the lowest for a most-active contract since Dec. 21, 2005. The metal touched a record $4.2605 on May 5.
``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 today in a statement.
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 today.
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 $250.75, or 5.3 percent, to $4,469 a metric ton ($2.03 a pound).
To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net.
