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 55 percent this year, the worst performance since at last 1987. The metal, which typically tracks industrial production, ranks 16th out of the 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 percent for the first time and shifted its focus to debt purchases to revive the economy. Growth in the U.S., the biggest copper consumer after China, will be a negative 1 percent next year, compared with a 1.2 percent gain 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 $115, or 4 percent, to $3,030 a metric ton as of 3:28 p.m. on the London Metal Exchange. The metal reached a record $8,940 on July 2. Futures for March rose 4.1 percent to $1.374 a pound in electronic trading on the Comex division of the New York Mercantile Exchange. The four worst performers in the 162-member Bloomberg World Mining Index this year were copper producers or explorers. Katanga Mining Ltd., which is restarting the Democratic Republic of Congo’s largest underground copper mine, fell 98 percent. Economic Expansion China’s economy expanded 9 percent 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 percent this year. That’s equal to 7.5 days of global demand, from as low as 3.2 days in July. Options for copper in London expiring next month suggest an expectation the metal won’t fall below $2,700. That’s the lowest strike price for puts, an option to sell the underlying commodity at a specific level. There are 20 puts outstanding at that strike price. Copper for January delivery rose $18 to $2,909.50 a ton. Rio Tinto Group, the world’s third-largest mining company, said today it sold a 50 percent in an aluminum smelter in China to its partner Qingtongxia Aluminium Co. to help reduce debt. Aluminum increased $25, or 1.7 percent, to $1,520 a ton, taking this year’s loss to 37 percent. Among other metals traded on the LME, nickel advanced $765, or 7.1 percent, to $11,475 a ton and lead gained $15, or 1.6 percent, to $970 a ton. Zinc rose $34 to $1,184 a ton. -- With reporting by Claudia Carpenter in London, Xiao Yu in Beijing and Jason Scott in Perth. Editors: Simon Casey, Stuart Wallace

Source