By Glenys Sim
Nov. 10 (Bloomberg) -- Copper surged in Asia as China, the world's largest user of the metal, unveiled a 4 trillion yuan ($586 billion) stimulus plan to prop up growth.
Prices in London jumped as much as 7.3 percent, leading industrial metals higher, after China said yesterday it will increase spending on infrastructure. The funds, equivalent to almost a fifth of the country's gross domestic product last year, will be used through 2010.
``The plan is certainly bullish for metals and we can expect some knee-jerk reaction from the markets, especially since it's been pretty gloomy the past few weeks,'' Cai Luoyi, chief analyst at China International Futures (Shanghai) Co., said.
Copper for delivery in three months on the London Metal Exchange climbed for the first day in four to $4,030 a metric ton, and stood at $4,019.75 a ton at 9:43 a.m. Singapore time.
The metal on the Comex division of the New York Mercantile Exchange rose as much as 7.7 percent to $1.8275 a pound in after-hours electronic trading, before trading at $1.8150.
Copper for January delivery on the Shanghai Futures Exchange gained as much as 3.9 percent to 30,950 yuan ($4,535) a ton, and stood at 30,740 yuan at 9:44 a.m. local time.
``However the plan is a long-term one, with spending to be spread over two years so we're not likely to see any immediate impact on demand, which will keep prices muted in the near-to- medium term,'' Cai said.
Stimulus Plan
China announced the package after finance ministers from the Group of 20 nations, of which China is a member, issued a joint statement saying they are ready to act ``urgently'' to tackle the economic slump.
The stimulus plan, of which 100 billion yuan is earmarked for this quarter, will go toward low-rent housing, infrastructure in rural areas, as well as roads, railways and airports, China's State Council said.
``As proactive and aggressive as the package is, the unfortunate reality is that no fiscal package can change the economy's cyclicality,'' Jerry Lou, an analyst at Morgan Stanley wrote in a note to clients today. ``We think Beijing can, at best, buy out the economy's hard-landing scenario and that is not enough to reaccelerate the economy in 2009.
Among other LME-traded metals, aluminum was up 3 percent at $2,018 a ton, zinc gained 5.4 percent to $1,150, lead added 5.1 percent to $1,431, and nickel jumped 8.4 percent to $11,900 as of 9:45 a.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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