Copper headed for its biggest annual drop in more than two decades in London trading. The metal pared its decline today on optimism governments will succeed in reviving economic growth next year.
Copper dropped 56% this year, the worst performance since at last 1987. The metal, which typically tracks industrial production, ranks 16 out of 19 commodities included in the Reuters/Jefferies CRB Index. Nickel, oil and gasoline did worse.
The Federal Reserve cut its benchmark interest rate this month to a range of zero to 0.25% for the first time and shifted its focus to debt purchases to revive the economy. Growth in the U.S., the second-biggest copper consumer after China, will be a negative 1% next year, compared with a 1.2% advance this year, a Bloomberg survey of economists showed.
"Things are going to be a lot better next year than a lot of people think," said Lars Steffensen, founder and managing director of Ebullio Capital Management LLP, a commodity hedge fund based in Southend-On-Sea, U.K. "The U.S. is going to print the dollar to get out of the recession and anything tangible, like industrial metals, is going to be worth more."
Copper for delivery in three months rose US$45, or 1.5%, to US$2,960 a metric ton as of 9:34 a.m. on the London Metal Exchange. The metal reached a record US$8,940 on July 2. Futures for March rose 1.4% to US$1.339 a pound in electronic trading on the Comex division of the New York Mercantile Exchange.
Copper producers or explorers were the four worst performers in the 162-member Bloomberg World Mining Index this year. Katanga Mining Ltd., which is restarting the Democratic Republic of Congo's largest underground copper mine, fell 98%.
Economic Expansion
China's economy expanded 9% in the third quarter, the slowest pace in five years. Industrial output grew the least since 1999 in November, exports fell for the first time in seven years and inflation was the weakest in almost two years, reports showed earlier this month.
Stockpiles of copper metal monitored by the LME have expanded to their biggest since February 2004. Including those monitored by bourses in Shanghai and New York, they have gained 64% this year. That's equal to 7.5 days of global demand, from as low as 3.2 days in July.
Among other metals traded on the LME, aluminum increased US$15, or 1%, to US$1,510 a ton. Nickel advanced US$220, or 2.1%, to US$10,930 a ton and lead fell US$10, or 1%, to US$945 a ton. Zinc rose US$27 to US$1,177 a ton.
