Copper, Aluminum May Drop Up to 29% in 12 Months, Ebullio Says

By Chanyaporn Chanjaroen

Sept. 12 (Bloomberg) -- Copper and aluminum may decline by as much as 29 percent in 12 months as slower global growth saps demand for metals, according to Ebullio Capital Management LLP, a U.K. money manager that has returned 63 percent this year.

Copper may drop to $5,000 a metric ton and aluminum to $2,000 a ton, Lars Steffensen, managing director of the Southend- on-Sea-based company, said in an interview yesterday. Copper for delivery in three months traded at $7,050 a ton as of 12:24 p.m. on the London Metal Exchange, while aluminum was at $2,621.50.

``The markets can go lower than what a lot of people thought,'' said Steffensen, who has traded industrial and precious metals for 22 years including at companies such as Gerald Metals Inc. Slower global economic growth will likely means fewer Chinese exports, which in turn should curb the nation's growth in demand for metals, he said.

Ebullio has mostly bet on a decline in commodities in the last several months, a strategy that returned 7.6 percent last month and 18 percent in July, according to the company. The S&P GSCI index of 24 commodity futures fell 6.9 percent last month and 12 percent in July.

The fund, which started in January, has about $5 million of private money invested in derivatives of all commodities traded on exchanges except livestock, Steffensen said.

Ebullio, registered in the Cayman Islands, will be open to investors in the European Union by October, with $100 million committed by investors so far. Approval from the Financial Services Authority is pending. Steffensen plans to introduce a power and emissions fund in January.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net