By Li Xiaowei

Nov. 24 (Bloomberg) -- Copper fell to near the lowest in more than three years as a global surplus widened, fueling concern that a deteriorating global economy is reducing demand for industrial metals.

World copper production exceeded usage by 75,000 metric tons in the first eight months, the International Copper Study Group said Nov. 21. That compared with a surplus of 22,000 tons for the same period last year, the Lisbon-based group said.

The report ``adds to the evidence that refined copper is moving into a surplus and to the downward pressure on the metal price,'' Zeng Chao, an analyst at Everbright Futures Co., wrote in an e-mailed report today.

Copper for three-month delivery fell as much as 2.8 percent to $3,440 a ton on the London Metal Exchange, and traded at $3,460 at 4:14 p.m. in Singapore. The price dropped to the lowest since July 2005 on Nov. 21 and is down 48 percent this year, heading for the first annual drop since 2001.

Inventories monitored by the London exchange rose to 283,125 tons on Nov. 21, the highest since February 2004.

February-delivery copper on the Shanghai Futures Exchange lost as much as 1.6 percent to 26,520 yuan ($3,884) a ton, and ended the day 26,610 yuan.

Freeport-McMoRan Copper & Gold Inc. Chief Executive Officer Richard Adkerson said copper will rebound as demand grows and mine output drops.

Supply Challenge

``There is going to be a need for copper as China, the rest of Asia, Eastern Europe and Latin America's standard of living rises,'' Adkerson said Nov. 21 while attending the 21-member Asia-Pacific Economic Cooperation forum in Lima. ``Mines are aging, so the industry is challenged from a supply standpoint.''

India's biggest copper smelter, owned by Vedanta Resources Plc unit Sterlite Industries (India) Ltd., is expected to produce 23,000 tons less copper for a month after damage to a cooling tower, a company executive said.

Refined copper imports by China, the largest consumer, rose 15 percent to 128,929 tons in October from the previous month, revised figures from customs showed today. Imports declined 13 percent to 1.1 million tons in the first 10 months.

``As the gain in imports won't fully offset the reduction in domestic production, Shanghai copper is likely to fare stronger than London in the near term,'' Zeng wrote.

Among other LME-traded metals, aluminum rose 1.1 percent to $1,770 a ton and nickel added 0.5 percent to $10,050 a ton. Zinc and lead traded at $1,170 and $1,172, and tin at $11,485 a ton at 3:58 p.m. Singapore time.

To contact the reporter for this story: Li Xiaowei in Shanghai at xli12@bloomberg.net

Last Updated: November 24, 2008 03:27 EST