Shanghai Copper Advances After China Cuts Rates to Spur Growth

By Jae Hur

Nov. 27 (Bloomberg) -- Copper futures in Shanghai rose for a third day after China, the biggest user of industrial metals, cut interest rates the most in more than a decade to spur growth.

Asian stocks gained after the People’s Bank of China slashed its one-year lending rate to 5.58 percent from 6.66 percent, less than three weeks after the government unveiled $586 billion in spending on housing and roads to help spur growth. China is the world’s largest consumer of the metal.

“The Chinese news helped boost copper prices in London overnight and also today in Shanghai,” said Hiroaki Hama, an analyst at Mizuho Corporate Bank Ltd. in Tokyo. “It’s certainly a positive factor for the metals market, but this will be short- lived because of a slowdown in car production and construction.”

February-delivery copper on the Shanghai Futures Exchange rose as much as 3.4 percent at 28,780 yuan ($4,214) a metric ton, and ended the day at 28,350 yuan.

Copper for three-month delivery on the London Metal Exchange fell 0.8 percent to $3,725 a ton at 3:47 p.m. in Singapore, after touching $3,840 yesterday, the highest since Nov. 14.

Copper has plunged 44 percent this year as the global recession reduced demand. The price is headed for the first annual decline since 2001, the last time the U.S. economy contracted.

Inventories fell 875 tons to 286,350 tons yesterday, the first drop since Oct. 21, according to figures from the London Metal Exchange. Stockpiles declined in Italy, the Netherlands, Singapore and South Korea. The stocks are still up 45 percent this year.

Among other LME-traded metals, aluminum was unchanged at $1,800 a ton, zinc fell 1 percent to $1,247, and nickel lost 0.5 percent to $10,550. Lead rose 1.2 percent to $1,200 and tin had not traded as of 3:50 p.m. in Singapore.

To contact the reporter for this story: Jae Hur in Singapore at jhur1@bloomberg.net