Copper Tumbles Most Since 2008 on China Manufacturing Data, Global Concern

Sept. 23 (Bloomberg) –Copper futures plunged the most since 2008 as a China factory index signaling contraction added to speculation that metal demand will slump amid signs of faltering economies in the U.S. and Europe.

A preliminary index of China purchasing managers was 49.4 this month, according to HSBC Holdings Plc and Markit Economics. A reading below 50 indicates contraction. Copper has dropped 22 percent this year as Europe's debt crisis and the possibility of another contraction in the U.S. economy hampered demand. In 2008, during the U.S. recession, copper fell 54 percent.

"The meltdown of 2008 is in the cards if the defaults start in Euroland," said David Threlkeld, the president of Resolved Inc., a trading company in Scottsdale, Arizona.

Copper futures for December delivery dropped 27.55 cents, or 7.3 percent, to close at $3.4885 a pound at 1:15 p.m. on the Comex in New York, the biggest drop for a most-active contract since Oct. 30, 2008. After the settlement, the price touched $3.412, the lowest since Sept. 10, 2010.

On the London Metal Exchange, copper for delivery in three months fell $626, or 7.5 percent, to $7,674 a metric ton ($3.48 a pound). The price has tumbled 25 percent from a record $10,190 on Feb. 15.

Euro-area services and manufacturing output contracted in September for the first time in more than two years, a report from Markit showed today. Europe accounts for 19 percent of global copper demand, compared with China's 37 percent and 11 percent for North America, according to Barclays Capital.

Global copper demand is expected to increase 3.9 percent this year, faster than production and resulting in a shortfall of 639,000 tons, Barclays said on Aug. 24.

"Copper's almost like a symbol of the bigger commodity markets," Kevin Norrish, an analyst at Barclays in London, said today in an interview. "There's evidence of increasing fundamental tightness that's not feeding into prices because of macroeconomic concerns."

On the LME, aluminum, lead, nickel, tin and zinc also dropped.