Copper Falls, Capping Record Monthly Slide, as Demand Slumps

By Millie Munshi

Oct. 31 (Bloomberg) -- Copper prices fell, capping the biggest monthly drop ever, on speculation that a deepening economic slump will reduce global demand for metals.

Spending by U.S. consumers fell the most in four years in September, concluding the weakest quarter in three decades, Commerce Department data showed today. More than $9.5 trillion has been wiped out from the value of stocks worldwide this month. In October, copper plunged 36 percent, the most since New York futures debuted in 1988.

``There are some headwinds in the economy that will continue to pressure copper,'' said Donald Selkin, the chief market strategist at National Securities Corp. in New York. ``It will keep trading around these lower levels.''

Copper futures for December delivery fell 6.15 cents, or 3.3 percent, to $1.829 a pound on the Comex division of the New York Mercantile Exchange. The metal, used in appliances, electronics and cars, has slumped 40 percent this year.

``There continues to be legitimate concern about a U.S.-led global recession, a fear that has dominated sentiment for much of this month and which is impacting metals again,'' Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said in a report.

The metal also fell as inventories gained, Selkin said. Stockpiles monitored by the London Metal Exchange jumped 3 percent today to 230,650 metric tons, the highest since March 17, 2004.

Recession Concerns

The prospect of ``severe'' recession has increased concern that demand will dwindle for industrial commodities, Citigroup Inc. said this week.

The Institute for Supply Management-Chicago said today its measure of business decreased in October by the most since the index started in 1968.

Citigroup slashed its 2009 copper-price forecast by 45 percent. The metal will average $2 a pound next year, the bank said on Oct. 27. That compares with a previous forecast of $3.65 a pound.

The Reuters/Jefferies CRB Index of 19 raw materials is heading for the steepest monthly decline since at least 1956 on concern that a slump in global economic growth will sap demand.

On the LME, copper for delivery in three months dropped $101, or 2.4 percent, to $4,099 a metric ton ($1.86 a pound).

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