BLBG: Copper Falls From Three-Month High as China’s Wen Disappoints
Copper fell from a three-month high in London as Chinese Premier Wen Jiabao said in an annual speech to parliament the government doesn’t need to increase stimulus spending to achieve its target for economic growth.
Stock and commodity markets rose around the world yesterday on anticipation new measures would be unveiled in the equivalent of a U.S. State of the Union address. China needs to “reverse the economic slide as soon as possible,” Wen said, without announcing an increase to a $585 billion stimulus package.
“Everything picked up on the speculation of a new stimulus package,” London-based analyst David Thurtell at Citigroup Inc. said by phone. “But there were no specifics whatsoever, so everything just sunk.”
Copper for delivery in three months on the London Metal Exchange fell 1.2 percent to $3,700 a metric ton by 10:55 a.m. in London after rising to the highest since Nov. 27 yesterday.
Merrill Lynch & Co. today cut its forecast for copper this year by 14 percent to an average of $1.54 a pound ($3,395 a ton) because of weak demand for products such as cars and appliances. The metal will rise to $1.72 in 2010, it said.
Spending by China and a “flood” of money into world economies will take effect in the second half and revive demand for commodities in 2010, it said in a report e-mailed today.
World demand is forecast to contract 4 percent in 2009, Sanford C. Bernstein Ltd. analyst Andrew Keen wrote in a note. The market surplus will reach 500,000 tons this year, he said.
China Smelter
Jiangxi Copper Co., China’s largest smelter, said a lack of scrap is threatening plans to raise output this year by 14 percent to 800,000 tons. The company closed a 50,000 ton plant because of the shortage, Chairman Li Yihuang said on the sidelines of the National People’s Congress in Beijing.
Copper inventories monitored by the LME shrank 0.2 percent to 525,200 tons today and are down 4.2 percent since the Feb. 25 high for the year.
Among other LME-traded metals, aluminum was down 0.7 percent to $1,350 a ton, zinc rose 0.4 percent to $1,229.75 and lead fell $5 to $1,175. Nickel retreated 0.8 percent to $9,950, while tin added 0.4 percent to $10,950.
