Copper Drops to Three-Year Low as Stockpiles Jump, Dollar Up

By Li Xiaowei

Nov. 13 (Bloomberg) -- Copper tumbled to the lowest in more than three years, as global stockpiles climbed to the highest since 2004, adding to evidence a deteriorating global economy is reducing demand for industrial metals.

Inventories monitored by the London Metal Exchange jumped 1.7 percent to 270,100 tons yesterday, the highest since March 2004. The dollar advanced to a two-week high against a basket of six major currencies as economies in Europe and Asia weakened, reducing the investment appeal of raw materials.

``London copper fell on the high level of inventory,'' analysts led by Tan Wentao at HNA Topwin Futures Co. wrote in an e-mailed report today. London's decline adds pressure to Shanghai copper as arbitrage opportunities may occur.

Copper for three-month delivery fell as much as 2.1 percent to $3,545 a metric ton on the London Metal Exchange, the lowest intra-day price since Sept. 19, 2005. It traded at $3,590 as of 12:07 p.m. in Shanghai. The metal has lost 48 percent this year, heading for the first annual drop since 2001.

January-delivery copper on the Shanghai Futures Exchange fell by as much as 3.3 percent to 28,280 yuan ($4,141) a ton and traded at 28,700 yuan a ton at the 11:30 a.m. local time break.

China's industrial production grew at the slowest pace in seven years last month, adding to concerns that the world's fastest-growing major economy risks a deeper slowdown.

Among other LME-traded metals, aluminum dropped 0.3 percent to $1,920 a ton, zinc declined 1.1 percent to $1,136 and tin was unchanged at $13,700 a ton.

To contact the reporters for this story: Li Xiaowei in Shanghai at xli12@bloomberg.net