Copper Falls in N.Y. as Slow Home Building Spurs Demand Concern

NEW YORK, Oct. 21 -- Copper fell from a one-year high in New York after data showed that U.S. builders began work on fewer new homes than forecast last month, raising concerns that demand will slacken.

    Work started on new housing at an annual rate of 590,000 units last month, up 0.5 percent from August, the Commerce Department said today. Economists forecast a rate of 610,000, the median of 76 estimates in a Bloomberg News survey. Builders are the biggest users of the metal, putting about 400 pounds (181 kilograms) of copper pipe and wire in the average home.

    "Housing is still under difficult circumstances, which means there is little real demand for copper," said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management, a New York-based hedge fund. Home starts were down 29 percent from a year earlier.

    Copper futures for December delivery dropped 3.45 cents, or 1.2 percent, to $2.932 a pound on the Comex division of the New York Mercantile Exchange. Earlier, the price reached $2.999, the highest level for a most-active contract since Sept. 29, 2008.

    The metal plunged 54 percent in 2008 as the housing market slumped amid the deepest recession since the 1930s.

    Futures rose earlier as the dollar declined, boosting the appeal of commodities. Copper prices have more than doubled this year, partly because of surging imports by China, the world's biggest metal consumer.

    "Copper is eyeing the $3 level," Groenewegen said. "It's absolutely possible it will get there, if we see more weakness in the dollar."

    BHP Supplies

    BHP Billiton Ltd. declared force majeure on some copper- supply contracts after the closure of a shaft at Australia's Olympic Dam.

    "That is the reason why copper suddenly shot up to the highs today," said Robin Bhar, an analyst at Credit Agricole SA's Calyon unit in London. "The customers must have got wind of it earlier today."

    On the London Metal Exchange, copper for delivery in three months fell $54, or 0.8 percent, to $6,416 a metric ton ($2.91 a pound).

    Aluminum, nickel and tin also fell in London. Zinc and lead rose.

    (Source: Bloomberg)