copper drops most in two weeks

Copper Drops Most in Two Weeks as U.S. Housing Slump Deepens

By Millie Munshi

Sept. 25 (Bloomberg) -- Copper dropped the most in two weeks on signs that the housing slump is deepening in the U.S., the world's second-largest consumer of the metal.

Lennar Corp., the biggest U.S. homebuilder, reported the biggest quarterly loss in its 53-year history. Economists expect a report today will show sales of previously owned U.S. homes fell in August to a five-year low. Copper, used in pipes and wires, before today had fallen 9.8 percent from a record as a slowdown in residential construction reduced U.S. demand.

Lennar ``is a useful proxy for the performance of the residential construction sector as a whole,'' John Kemp, a London-based analyst at Sempra Metals Ltd., said in an e-mailed note. ``The outlook is grim.''

Copper futures for December delivery fell 3.3 cents, or 0.9 percent, to $3.612 a pound at 8:49 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would be the biggest drop since Sept. 7. The metal rose to a record $4.04 a pound in May 2006.

Lennar's third-quarter net loss was $513.9 million, or $3.25 a share, compared with profit of $206.7 million, or $1.30, a year earlier, the company said today.

The National Association of Realtors may report that purchases of previously owned homes declined 4.6 percent to an annual rate of 5.48 million, according to the median forecast in a Bloomberg News survey of 72 economists. The group will release its report at 10 a.m. in Washington.

Builders are the biggest copper users in the U.S., putting about 400 pounds into the average home. China is the world's largest user of the metal.

On the London Metal Exchange, copper for delivery in three months fell $40, or 0.5 percent, to $8,000 a metric ton. Before today, the metal had gained 27 percent this year in London.

To contact the reporter on the story: Millie Munshi in New York at [email protected] .