By Claudia Carpenter Nov. 7 (Bloomberg) -- Copper and aluminum dropped on the London Metal Exchange after U.S. unemployment climbed to a 14- year high, adding to signs of an economic slump that has reduced demand for industrial metals. Tin was the only gainer. U.S. employers shed 240,000 jobs in October, lifting the unemployment rate to 6.5 percent, the Labor Department said today. Economists expected a drop of 200,000 jobs, the median in a Bloomberg survey. Copper has dropped 44 percent this year and aluminum is down 18 percent. ``There are significant concerns about the outlook for demand,'' David Moore, a commodity strategist at Commonwealth Bank of Australia, said in an interview from Sydney. Copper fell $45 to $3,760 a ton as of 4:29 p.m. on the London Metal Exchange and aluminum dropped $74 to $1,965 a ton. Both metals were at records in July. ``In a short period of time, the market has switched from pricing in a mere slowdown'' in global gross domestic product growth ``to pricing in a full blown recession,'' according to a Barclays Capital report yesterday. Copper will average $4,700 a ton next year, down from a forecast of $6,500 last month, according to the report. Aluminum will average $2,163 next year, down from the previous forecast of $2,600. Copper and aluminum producers need to make ``severe'' cutbacks to prevent supplies from overwhelming demand as customers cancel orders amid a global economic slowdown, said George Cheveley, a fund manager at Investec Asset Management Ltd. Aluminum Supply Aluminum supplies may exceed usage by 1 million tons next year unless output is reduced, Cheveley said in an interview yesterday in London. The price of copper may have to fall to $3,000 a ton before mining companies are forced to reduce supplies to match demand, he said. Tin is the only industrial metal that will have a supply deficit next year, he said. Tin rose $25 to $14,600 a ton. Stockpiles of copper in warehouses monitored by the LME gained 2,250 tons, or 0.9 percent, to 254,800 tons, the most since March 10, 2004. Aluminum inventories at 1.54 million tons have climbed 65 percent this year. Zinc fell $3 to $1,095 a ton, lead declined $74 to $1,385 a ton and nickel dropped $405 to $11,000 a ton. To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net

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