Copper Falls as U.S. Industrial Production Drops; Zinc Advances

By Claudia Carpenter

Dec. 15 (Bloomberg) -- Copper declined for a second trading session in London on speculation a contraction in U.S. industrial production will curb demand for metals in the world’s second- largest user.

U.S. industrial output fell 0.6 percent in November after a 1.5 percent gain the month before, the Federal Reserve said today. Copper has dropped 53 percent this year amid recessions in the U.S., Germany and Japan and slowing growth in China.

“The fear factor is still in the economy,” said James Roberts, a broker at Sucden Financial Ltd. in London. “We haven’t really got too much evidence to push aggressively to the upside.”

Copper for delivery in three months decreased $25, or 0.8 percent, to $3,150 a metric ton as of 2:23 p.m. on the London Metal Exchange.

The metal used in cars and homes had climbed as much as $105 a ton on renewed prospects a U.S. rescue of automakers would support demand for industrial metals.

President George W. Bush said his administration may use some of the $700 billion for U.S. banks to save the country’s automakers. Copper dropped 4.4 percent on Dec. 12 after the Senate rejected an automaker rescue, threatening to worsen a U.S. recession that caused slowdowns across the world.

China’s industrial production grew 5.4 percent in November compared with a year earlier, the statistics bureau said today. Economists forecast a 7.2 percent rise, according to a Bloomberg survey.

Copper inventories in warehouses monitored by the London Metal Exchange jumped 8,000 tons, or 2.6 percent, to 316,225 tons, the highest since Feb. 17, 2004. They’ve climbed 59 percent this year.

Aluminum fell $6 to $1,494 a ton and nickel declined $324 to $10,326 a ton. Lead rose $20 to $1,038 a ton and zinc increased $25 to $1,090 a ton.

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