Copper headed for its biggest annual drop in over two decades in London trading. The metal pared its decline today on optimism the governments will succeed in reviving economic growth next year.
Copper dropped 56 per cent this year, the worst performance since 1987. The metal, which typically tracks industrial production, ranks 16th out of the 19 commodities included in the Reuters/Jefferies CRB Index. Nickel, oil and gasoline did worse.
The Federal Reserve cut its benchmark interest rate this month to a range of zero to 0.25 per cent for the first time and shifted its focus to debt purchases to revive the economy. Growth in the US, the biggest copper consumer after China, will be negative 1 per cent next year, compared with a 1.2 per cent gain this year, a survey of economists showed.
“Things are going to be a lot better next year than a lot of people think,” said Lars Steffensen, founder and managing director of Ebullio Capital Management LLP, a commodity hedge fund based in Southend-on-Sea, UK “The US is going to print the dollar to get out of the recession and anything tangible, like industrial metals, is going to be worth more.”
Copper for delivery in three months rose $20, or 0.7 per cent, to $2,935 a tonne on the London Metal Exchange. The metal reached a record $8,940 on July 2. Futures for March rose 0.6 per cent to $1.328 a pound in electronic trading on the Comex division of the New York Mercantile Exchange.
The four worst performers in the 162-member Bloomberg World Mining Index this year were copper producers or explorers. Katanga Mining Ltd., which is restarting the Democratic Republic of Congo’s largest underground copper mine, fell 98 per cent.
Also Read
China’s economy expanded 9 per cent in the third quarter, the slowest pace in five years. Industrial output grew the least since 1999 in November, exports fell for the first time in seven years and inflation was the weakest in almost two years, reports showed earlier this month.
Stockpiles of copper monitored by the LME have expanded to their biggest since February 2004. Including those monitored by bourses in Shanghai and New York, they have gained 64 per cent this year.