Copper Prices Head for Longest Slump Since October on Recession

By Millie Munshi

Dec. 4 (Bloomberg) -- Copper prices headed for the longest slide since October as tumbling equity markets spurred concern that the global economic slump may deepen.

The MSCI World Index of shares lost as much as 0.8 percent today, and more than $30 trillion has been erased from the value of global equities in 2008. Base metals, including copper, have the highest correlation of all commodities with the stock market, according to Deutsche Bank AG. Before today, copper plunged 49 percent this year.

“Every eye is on the stock market” and the global economic outlook, said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “Tick for tick, copper is trading along with stocks.”

Copper futures for March delivery dropped 3.1 cents, or 2 percent, to $1.5235 a pound at 11:03 a.m. on the Comex division of the New York Mercantile Exchange. The metal has dropped for five sessions in a row, and a decline at settlement would mark the longest slump since Oct. 24.

Before today, the price plunged 64 percent from a record $4.2605 on May 5, including 8.1 percent in the previous four sessions.

Tumbling copper prices have hurt profits for producers and mining companies have announced plans to curb output.

Freeport-McMoRan Copper & Gold Inc. Chief Executive Officer Richard Adkerson said he’s prepared to make a third round of production cuts at the world’s second-largest copper producer after prices dropped by more than half in three months.

“We have to be prepared for a protracted period of low prices because of the uncertainties in the marketplace right now,” Adkerson said in an interview yesterday.

Freeport Production Cuts

Freeport said yesterday production next year will be about 5 percent less than previously forecast and 11 percent lower in 2010 after the company deferred restarting two mines and shut down some of its least-profitable sites in November. A decline to “significantly” less than $1.50 a pound would lead to additional reductions, Adkerson said.

Copper’s decline today occurred as a report showed orders placed with U.S. factories in October fell by the most in 8 years. The metal is used in pipes and wires for electronics, appliances and cars.

On the London Metal Exchange, copper for delivery in three months fell $101, or 2.9 percent, to $3,345 a metric ton ($1.52 a pound.)

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