By Claudia Carpenter and Millie Munshi Oct. 23 (Bloomberg) -- Copper fell to a three-year low and nickel dropped to the lowest since 2003 on speculation the global economic slump will crimp demand for metals from investors who had helped send commodities to a record in July. Copper fell below $4,000 a metric ton in London for the first time since October 2005, and the Reuters/Jefferies CRB Index of 19 commodities touched its lowest level in four years, before gaining on a rally in oil and grains. The Bloomberg World Mining Index of 162 companies lost $493 billion in value since the bankruptcy of Lehman Brothers Holdings Ltd. in September accelerated the financial crisis. ``As long as we have uncertainty about the overall financial system, this is probably not yet the bottom for base metals,'' said Christoph Eibl, who helps manage more than $1 billion of commodity investments at Tiberius Asset Management AG in Zug, Switzerland. ``People just don't want to own any commodities that have a high correlation to overall economic developments.'' Copper for delivery in three months declined $95, or 2.3 percent, to $4,060 a ton at 3:49 p.m. on the London Metal Exchange. The price earlier reached $3,851, the lowest since Oct. 24, 2005. Before today, copper had lost 54 percent since touching a record $8,940 on July 2. The abrupt drop from record highs this year has brought ``the end of the supercycle'' for copper, and the market will remain depressed until the international economic situation improves, said Jose Pablo Arellano, the executive president of Chile's Codelco, the world's biggest copper miner. Recession Fears European equities fell and shares in Japan dropped to the lowest in five years. BHP Billiton Ltd., the world's biggest mining company, dropped as much as 13 percent in London Stock Exchange trading. The number of U.S. workers filing first-time claims for unemployment benefits rose last week, a report showed today. U.K. retail sales fell in September, while French business confidence dropped to the lowest in 15 years this month. The Japanese government said this week that the world's second-largest economy has probably entered its first recession in six years. ``These global recession fears don't seem unfounded,'' said Michael K. Smith, president of T&K Futures & Options in Port St. Lucie, Florida. ``There are pretty clear signs from all over the world that things are slowing down a lot. There's definitely more room on the downside for copper.'' New York Copper In New York, copper futures plunged to the lowest price in more than three years, dropping as much as 7.9 percent after tumbling 14 percent in the first three sessions this week. Before today, the metal was down 35 percent since the end of September, heading for its worst month on record on signs of declining usage in the U.S. and Asia. ``We're seeing a slowdown in China,'' Russell Norton, head of commodities sales at Barclays Capital in Asia, said in a Bloomberg Television interview. Buying patterns there ``have always been very price-sensitive, so when they see a falling market, the buyers step back and let the market fall.'' Copper futures for December delivery fell 3.8 cents, or 2 percent, to $1.8275 a pound on the Comex division of the New York Mercantile Exchange. Earlier, the price touched $1.718, the lowest for a most-active contract since Sept. 27, 2005. Inventories of copper in warehouses monitored by the LME advanced 1,500 tons to 209,250 tons, and aluminum stockpiles jumped 3,475 tons to 1.5 million tons, the most since February 1995, exchange figures show. Nickel Drops Nickel declined $600, or 6 percent, to $9,400 a ton after falling to $9,000. Nickel's biggest use is in the manufacture of stainless steel. That market is ``weaker'' partly because some distributors have postponed purchases after the drop in nickel prices, Outokumpu Oyj, the world's fourth-largest maker of stainless steel, said in a statement today. Nickel has dropped 64 percent this year. Aluminum dropped as much as 2.3 percent to $1,958 a ton, the lowest since November 2005, before gaining $8 to $2,013 on the LME. Vimetco NV, the aluminum producer controlled by Russia's Vitaliy Machitski, cut annual production by 80,000 tons in China and will delay investment after prices slumped, the Amsterdam-based company said in a statement today. China is the world's largest producer of aluminum. Zinc was up $55 at $1,195 a ton after dropping as much as 5.6 percent earlier to $1,076; lead rose $23.75, or 1.9 percent, to $1,284.75 a ton; and tin dropped $50 to $11,500 a ton. To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net; Millie Munshi in New York at mmunshi@bloomberg.net.

Source