Hedge Funds Lose Influence on Copper, Bloomsbury Says

By Claudia Carpenter

Dec. 3 (Bloomberg) -- Hedge funds and index funds that helped drive copper to a record in July have “dropped out” in the last several weeks, leaving “almost traditional” factors such as inventories more influential, according to Bloomsbury Minerals Economics Ltd. in London.

“What we see now is a new price-to-inventory relationship so we have a much clearer picture of how fundamentals will move the price,” Managing Director Peter Holland said in a phone interview today. “We can begin analyzing the market in an almost traditional way, looking at the rate of demand growth, inventories and exchange rates.”

Copper has dropped 61 percent from a record in July as recessions in the U.S., Germany and Japan curbed demand for cars and homes and the dollar gained against the euro, raising costs for buyers in Europe. Prices climbed every year from 2002.

Copper for immediate delivery will fall to $3,239 a metric ton in 2009 from $6,977 a ton this year, Bloomsbury forecast in a report today. The 2009 forecast was lowered from $3,784 estimated last month.

Production will outpace demand by 244,000 tons next year after 109,000 tons this year and 47,000 tons last year, it said.

Copper for immediate delivery closed yesterday at $3,535.50 a ton on the London Metal Exchange.

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