Copper, Lead Are Poised for Biggest Weekly Declines Since 1980s

By Claudia Carpenter

Oct. 24 (Bloomberg) -- Copper and lead were poised for their biggest weekly declines since the 1980s while aluminum dropped the most in two years as consumer demand for cars and houses crumbles amid the widening world economic slowdown.

Copper, used in wires and pipes, sank 22 percent this week and lead, a raw material for car batteries, tumbled 20 percent. Toyota Motor Corp., the world's second-largest automaker, reported its first drop in quarterly sales in seven years. Volvo AB, the second-biggest heavy-truck maker, said it expects a 10 percent drop in the North American market this year.

``The most important factors for industrial metals are construction and auto manufacturing and those two have been hit,'' Commerzbank AG analyst Eugen Weinberg said in Frankfurt. A car contains about 300 pounds (130 kilograms) of aluminum, according to Commerzbank.

All industrial metals on the London Metal Exchange declined. Copper dropped every day this week, pulling prices down the most since at least April 1986. The metal lost 7.5 percent today to $3,740 a metric ton by 12:22 p.m. on the LME.

Lead for three-month delivery fell $126 to $1,161 a ton. Aluminum tumbled $62, or 3.1 percent, to $1,945 a ton, or a 12 percent drop for the week, the most since May 19, 2006.

Copper may drop to $3,500 by next week, Michael Khosrowpour, an analyst at Triland Metals Ltd., said in London. Aluminum may fall to $1,900 a ton over the same period, he said.

Prices extended declines as shares tumbled around the world and the dollar gained, making metals more expensive for buyers using other currencies. Japan's Nikkei 225 Stock Average closed just 41 points from the lowest since 1982.

First In, First Out

``The U.S. entered recession first, the thinking is it will be out of recession first and the rest of the world is going to get worse and worse,'' said Robin Bhar, an analyst at Calyon in London.

Stockpiles of copper in warehouses monitored by the LME gained 2,725 tons, or 1.3 percent, to 211,975 tons, the biggest jump since Oct. 7.

All of the gains were in the Netherlands, Spain and the U.S., while inventories dropped in South Korea, a location used to store metal for buyers in China, the world's largest user of copper. Inventories in warehouses monitored by the Shanghai Futures Exchange declined 11 percent in the week ended yesterday.

Copper consumption in China will rise between 5 percent and 6 percent next year, from 5.1 percent this year, Paul Robinson, manager of nonferrous metals research at London-based research company CRU, said yesterday. Contracts for the metal on the Shanghai Futures Exchange were suspended today after falling by their limit for the past three days.

Zinc slid $94 to $1,106, tin dropped $1,150 to $10,850 a ton and nickel declined $426 to $8,924 a ton.

Tin supply is forecast to fall short of demand by 20,000 tons, according to the St. Albans, England-based industry group ITRI Ltd. ``It will take a major decline in world demand to eliminate this,'' said Peter Kettle, ITRI research manager.

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