Copper Heads for Biggest Quarterly Loss in More Than 22 Years

By Glenys Sim

Sept. 30 (Bloomberg) -- Copper is headed for its biggest quarterly loss since at least 1986 on concern a spreading financial crisis may slash demand for raw materials.

Copper is the second-worst performer behind nickel among the London Metal Exchange's six industrial metals this quarter. The Reuters/Jefferies CRB Index of 19 commodities plunged by the most in more than five decades yesterday after U.S. lawmakers rejected a $700 billion bank rescue plan.

``The U.S. is moving into a recession, so is Europe and Japan,'' Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd., said today. ``Demand conditions have got a big question mark over them.''

Copper for delivery in three months on the London Metal Exchange fell as much as 1.7 percent to $6,330 a metric ton, the lowest since December 18. The contract traded at $6,355 a ton at 1:01 p.m. in Singapore, down 25 percent for the quarter.

December delivery copper on the Comex division of the New York Mercantile Exchange lost 1.7 percent to $2.856 a pound at the same time. Earlier the contract dropped to $2.8425 a pound, the lowest for a most-active since March 2007. China's markets are closed for a week-long holiday.

Low global stockpiles may help stem the metal's decline. Stockpiles monitored by London Metal Exchange warehouses dropped a sixth day to 198,925 tons yesterday, and reserves in Shanghai warehouses fell 5.5 percent to 16,130 tons last week.

``The global supply and demand balance will remain tight,'' Joel Crane, Deutsche Bank AG's New York-based analyst, said in a report. ``Given the dearth of new projects scheduled to come online over the next two to three years, any supply disruptions or upside risk to the demand scenario would certainly have positive implications on pricing.''

Nickel Tumbles

Nickel slumped to the lowest in two-and-a-half years on speculation a slowdown in global economic growth will further curb demand from the stainless steel industry, which accounts for two-thirds of total nickel use.

Stockpiles of the metal monitored by the London Metal Exchange jumped to 55,596 metric tons yesterday, the highest since June 1999.

Nickel for delivery in three months on the London Metal Exchange fell as much as 5 percent to $15,588 a ton, extending yesterday's 3.5 percent slide. This is the lowest intra-day price since April 3, 2006. The metal traded at $16,000 a ton at 12:49 p.m. in Singapore, taking the quarter's loss to 25 percent.

Among other LME-traded metals, aluminum fell 1 percent to $2,417, zinc slipped 1.3 percent to $1,670, lead declined 2.5 percent to $1,780, and tin had not traded as of 12:50 p.m. in Singapore.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net