Copper snapped two days of gains in London on speculation mining companies may add to increasing supplies of the metal, worsening a global surplus. Nickel, zinc and aluminum also fell. Copper closed yesterday at a seven-week high after jumping 15 percent in two sessions. Stocks of the metal in warehouses monitored by the London Metal Exchange have jumped 6.4 percent this week to the highest since Dec. 17, 2003. “There’s pretty strong selling interest by producers,” said David Thurtell, an analyst at Citigroup Inc. in London. “Stocks yesterday and today both suggest that supplies are now well in excess of demand. Demand is just very poor.” Copper for three-month delivery declined $180, or 5.1 percent, to $3,375 a metric ton at 12:57 p.m. on the LME. The contract closed yesterday at $3,555 a ton, the highest since Dec. 2. A worldwide slump in construction has cut into use of the metal, which is employed in plumbing and electrical wiring. The past two days’ gains probably stemmed from buying of contracts to cover so-called short positions, or bets on lower prices, according to Thurtell. “You always have prices rally when there’s short-covering,” he said. In China, the world’s largest copper buyer, the government stockpiling agency may hold off purchasing the metal until its price is near a low, London-based research company CRU said today in an e-mailed report. The low is expected in this year’s fourth quarter, it said. Price Forecast Copper for immediate delivery probably will average between $2,800 and $3,000 a ton this year, CRU’s Ross Strachan said by phone. That compares with the $3,525 median estimate of 23 analysts surveyed by Bloomberg News. Production of the metal will exceed demand by 652,000 tons next year, a larger surplus than this year’s 288,000 tons, Citigroup forecast yesterday in a report. Mine production will jump 16 percent in 2009 to 17.6 million tons, according to the report. Aluminum will be in surplus through at least 2014, zinc through 2012 and nickel through 2013, Citigroup said. Freeport-McMoRan Copper & Gold Inc., the largest publicly traded producer of the industrial metal, said yesterday its fourth-quarter copper sales rose 36 percent from a year earlier. Thurtell called $3,500 a ton “a nice level” for producer sales. The spot copper price’s discount to the one-year contract is “excessive compared to previous years and implies a further rise in inventories,” Zug, Switzerland-based Tiberius Asset Management AG wrote in a report today. Surpluses in all industrial metals this year may become deficits for copper, nickel and zinc next year, according to the report. LME copper inventories, at 451,800 tons, have jumped 29 percent this year, gaining in Europe, the U.S. and Asia. Other metals for delivery in three months also declined on the LME. Aluminum dropped $28, or 2 percent, to $1,355 a ton. Nickel fell $400, or 3.4 percent, to $11,500 a ton, and lead slid $35, or 2.9 percent, to $1,160 a ton. Zinc lost $26, or 2.2 percent, to $1,174 a ton, and tin retreated $450, or 3.6 percent, to $11,950 a ton.

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