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Copper declined on speculation a U.S. housing slowdown has created an oversupply of the metal used in wires and pipes.

Copper production exceeded demand by 84,000 metric tons in the first eight months of the year, the Lisbon-based International Copper Study Group said yesterday in a report. Consumption in the U.S., the world's second-largest user of the metal, was flat in the period, and ``depressed'' in August, the group added.

``The copper market will continue easing in the next few years as the U.S. housing market is going to impact prices,'' David Thurtell, a London-based analyst at BNP Paribas, said today.

Copper for delivery in three months on the London Metal Exchange fell as much as $75, or 1.1 percent, and traded at $6,830 a metric ton as of 10:19 a.m. local time. The contract has fallen 22 percent from the May 11 peak of $8,800 a ton as higher U.S. interest rates hurt demand for industrial metals.

China, the world's largest copper user, used 6.9 percent less copper in the first eight months, the ICSG said. Still, demand growth in Europe, Japan and India helped world usage to expand by 3 percent in the period, it added.

The number of U.S. housing starts in October was the weakest since July 2000 and was down 27 percent from a year earlier, the Commerce Department reported Nov. 17. Building permits dropped to a 1.535 million annual pace, a record ninth straight decline and the lowest since December 1997.

Stockpiles of copper monitored by the LME fell 100 tons to 157,925 tons, the exchange said today. Inventory has increased 76 percent this year, to the highest since April 2004.

Copper Surcharge

Codelco, the world's largest copper producer, raised the surcharge it's seeking from Chinese buyers of the metal next year by $5 a ton to $130, according to Huang Xiaotian, general manager of copper at Golden Dragon Precise Copper Tube Inc. in Shanghai. The surcharge, or premium, is the sum added to the LME copper price for immediate delivery and includes shipping and insurance costs.

``The small rise reflects Codelco's expectations that China's demand will remain strong,'' Thurtell said.

Freeport-McMoRan Copper & Gold Inc. Chief Executive Officer Richard Adkerson said yesterday that this year's record rally in copper may not be over because demand for the metal has grown and major new supplies are getting harder to find.

``There's nothing to say that we've seen the peak of copper prices,'' Adkerson said. Freeport, based in New Orleans, yesterday agreed to buy copper producer Phelps Dodge Corp. for about $25.5 billion.

Supply Fundamentals

Copper prices will be buoyed by ``strong fundamental supply and demand factors,'' Adkerson said. ``Inventories have risen, somewhat, but fundamentally, supplies are very tight. When you look at the demand factors, the way that copper is used, the need for urbanization and industrialization around the world, the outlook remains strong for the metal.''

Citigroup Inc., the biggest U.S. bank, said yesterday the ``super cycle'' in metals it forecast more than 18 months ago is still intact and the so-called fundamentals of supply and demand will keep prices for copper, zinc and nickel above historical averages.

Citigroup analysts led by Sydney-based Alan Heap boosted their 2007 average copper-price forecast by 7.3 percent to $2.95 a pound, or $6,503 a metric ton. Prices will average $2.50 a pound in 2010, more than double a previous forecast, they added.

Heap's 2007 copper forecast is 7 percent higher than the median $2.75 prediction of nine analysts surveyed by Bloomberg News as of last week. Copper averaged $1.03 a pound in the past 10 years, according to data compiled by Bloomberg.

Among other LME-traded metals, aluminum fell $19, or 0.7 percent, to $2,636 a ton and zinc slipped $59, or 1.4 percent, to $4,110 a ton. Lead fell $3 to $1,517, while nickel gained $250 to $30,500 a ton. Tin was unchanged at $9,850 a ton.