Copper Drops as European Slowdown May Limit Use; Aluminum Gains

By Claudia Carpenter

Aug. 11 (Bloomberg) -- Copper fell, extending its drop to a six-month low on the London Metal Exchange, on speculation slowing growth in Europe will limit demand for the metal used in cars and homes. Aluminum rebounded.

Industrial production in France unexpectedly fell in June, led by declining car sales, a report today from the National Statistics Office in Paris showed. European Central Bank President Jean-Claude Trichet said last week economic growth will be ``particularly weak'' through the third quarter.

``You now see Europe slowing down quite considerably,'' said Gayle Berry, a metals analyst at Barclays Capital in London.

Copper for delivery in three months fell $16 to $7,384 a metric ton as of 12 p.m. in London and earlier dropped to $7,329.50, the lowest since Feb. 7.

Stockpiles of copper in warehouses monitored by the LME increased 750 tons to 151,625 tons, the highest since Feb. 14.

Declines may be limited on prospects for increased demand from China, the world's biggest buyer of the metal.

China imported 7 percent more copper and copper products in July than in June, the first increase in three months, figures from the customs office today showed. Imports of recycled copper surged. Copper advanced 0.7 percent after the report.

China may have to turn to refined copper imports because mine production is declining and industries that supply recycled copper probably won't keep increasing output as economic growth slows, Berry said. Copper mine production fell 3.3 percent this year through April compared with the same period last year, the Lisbon-based International Copper Study Group said last month.

Zinc declined $10 to $1,675 a ton, and earlier fell to $1,652, the lowest since November 2005. Prices dropped as much as the 4 percent daily limit in Shanghai.

Aluminum, the industrial metal that's the most energy- intensive to produce, climbed $6 to $2,852 a ton. Crude oil jumped as much as 1.5 percent.

Nickel dropped $200 to $17,950, tin decreased $200 to $18,800 and lead dropped $29 to $1,945 a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net