Copper may drop next week on speculation that the U.S. recession is worsening, reducing demand for industrial metals. Twelve of 20 analysts, investors and traders, or 60 percent, surveyed by Bloomberg News said copper would decline. Eight people, or 40 percent, expected a gain. Last week, 65 percent expected prices to fall. Copper for delivery in three months on the London Metal Exchange has dropped 4.5 percent this week to $3,275 a metric ton. Prices will average $3,384 a ton in the second quarter and $3,527 for 2009, this week’s survey showed. Tim Mercer, chief investment manager at Hong Kong-based hedge fund Musashi Capital Ltd., forecasts the metal will trade between $2,000 and $3,400 a ton this year and will average $2,600 in the second quarter. The three-month contract has averaged $3,318 a ton so far in 2009. “My forecast assumes a rebound in copper by year end,” Mercer said. “I’m just trying to be optimistic. There are literally no signs of any rebound now.” The U.S. economy probably shrank in the fourth quarter at an annual pace of 5.4 percent, higher than the 3.8 percent reported last month, according to the median estimate of 16 economists surveyed by Bloomberg News as of yesterday. The Commerce Department report is due Feb. 27. The U.S. is the largest buyer of copper, used in plumbing and electrical wiring, after China. The weekly Bloomberg copper survey has forecast prices accurately in 14 of the past 24 weeks, or 58 percent of the time. This week’s survey results: Bullish: 8, Bearish: 12, Neutral: 0.

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