By Li Xiaowei Nov. 25 (Bloomberg) -- Copper declined as investors speculated a rally to a one-week high was overdone against the backdrop of a global economic slowdown and rising inventories. London copper jumped as much as 7.8 percent to the highest price since Nov. 14 yesterday as U.S. stocks rallied on a government rescue of Citigroup Inc. The global surplus of the metal, used in power grids and buildings, more than tripled to 75,000 metric tons in the eight months ended August from a year ago, according to the International Copper Study Group. “The boost to sentiment by the Citigroup news proved to be short-lived,” said Wang Lei, an analyst at Haitong Futures Co., said by phone from Shanghai today. “Fundamentals are still bearish for industrial metals as the global economy slows.” Copper for three-month delivery fell as much as 2.9 percent to $3,640 a ton on the London Metal Exchange and traded at $3,680 at 12:44 p.m. in Shanghai. It jumped to as high as $3,815 yesterday. The price is down 45 percent this year, headed for the first annual drop since 2001, while inventories monitored by the London exchange have advanced 44 percent to the highest since February 2004. February-delivery copper on the Shanghai Futures Exchange traded at 27,730 yuan ($4,061) a ton after rising as much as 4 percent, or the exchange-imposed limit, from the previous settlement price. OZ Minerals Zinc pared earlier losses on the LME after OZ Minerals Ltd., the world’s second-largest zinc mining company, said it will defer A$495 million ($318 million) in project spending and cut output because of turmoil in debt and metal markets. The Melbourne-based company will also cut output at its largest zinc mine by 20,000 tons, it said today. Three-month delivery zinc fell 0.8 percent to $1,210 a ton at 12:39 p.m. Shanghai time, after dropping to as low as $1,202. Among other LME-traded metals, aluminum added 0.2 percent to $1,804.25 a ton, tin fell 3.1 percent to $12,400 and nickel dropped 1.6 percent to $10,500. Aluminum production costs in China, the world’s biggest maker, may decline because of cheaper electricity, curbing output cuts, Scotia Capital Inc. said. Costs “could fall to around 12,000 yuan a ton in coming months” as electricity producers reduce fees to aluminum smelters, said Liu Na, an analyst with Scotia Capital, a unit of Toronto-based Bank of Nova Scotia, Canada’s third-largest bank. Aluminum for immediate delivery traded between 13,100 yuan to 13,140 yuan a ton today at Changjiang, Shanghai’s biggest cash market. To contact the reporter for this story: Li Xiaowei in Shanghai at xli12@bloomberg.net

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