Copper Drops in New York as U.S. Housing Starts Plunge in July

By Millie Munshi

Aug. 19 (Bloomberg) -- Copper fell in New York after a report showed U.S. builders in July broke ground on the fewest houses in 17 years, signaling metal demand will dwindle.

U.S. housings starts plunged 11 percent to an annual rate of 965,000, the lowest since March 1991, the Commerce Department said today. Builders are the biggest consumers of copper, using the metal for pipes and wires. Before today, the price tumbled 22 percent from a record in May.

``The weakening economics means that a lot of people will continue to be negative toward copper,'' said Ron Goodis, a futures-trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. ``There's still more downside to go.''

Copper futures for December delivery declined 0.7 cent, or 0.2 percent, to $3.302 a pound at 9:54 a.m. on the Comex division of the New York Mercantile Exchange. The metal earlier rose as much as 0.5 percent on speculation a six-week slide may spur demand. The all-time high on May 5 was $4.2605.

U.S. building permits, a sign of future construction, declined 1 percent to a 937,000 annual pace. That compared with the 970,000 rate projected by economists, according to the median pf 53 forecasts in a Bloomberg News survey.

The permits data show ``the outlook is pretty negative'' for copper demand, Goodis said.

On the London Metal Exchange, copper for delivery in three months gained $5 to $7,360 a metric ton ($3.34 a pound). Before today, the price rose 4.9 percent in the past 12 months.

To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net