Copper Futures Head for Biggest Weekly Drop Since May 2007

By Millie Munshi

Aug. 8 (Bloomberg) -- Copper headed for the biggest weekly drop since May 2007 on heightened concern that slumping worldwide economies will erode demand for industrial commodities.

Singapore lowered its 2008 growth forecast, warning of a ``bumpy year ahead.'' Italy's economy unexpectedly shrank in the second quarter, edging closer to a recession. The Federal Reserve this week said ``downside risks to growth remain'' in the U.S. Copper has tumbled 20 percent from a record in May, touching a six-month low today, on signs of less consumption.

``People have gotten very worried about demand for commodities because of this global meltdown,'' said Michael K. Smith, president of T&K Futures & Options in Port St. Lucie, Florida. ``If all these major economies are going to slow down, people think that's really bad news for copper.''

Copper futures for September delivery fell 8 cents, or 2.3 percent, to $3.338 a pound at 9:33 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark a weekly drop of 6.8 percent, the most since the week ending May 18, 2007.

Earlier, the price touched $3.3255, the lowest since Feb. 7. The metal reached a record $4.2605 on May 5.

The metal also dropped as a decline in energy prices led a slide in commodities, Smith said.

``Crude is the king of commodities,'' he said. ``When oil drops, it brings everything else down with it.''

Oil dropped as much as 2.5 percent today and was down almost 20 percent from a record in July. The Reuters/Jefferies CRB Index of 19 raw materials fell as much as 1.2 percent.

On the London Metal Exchange, copper for delivery in three months fell $225, or 2.9 percent, to $7,440 a metric ton ($3.37 a pound). Before today, the price dropped 1 percent in the past 12 months.

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