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Copper falls as Codelco cuts seen inadequate to reverse surplus
[BEIJING] Copper declined on Tuesday as planned investment cuts by Codelco, the world's biggest miner of the red metal, are seen insufficient to reverse a global glut amid sputtering demand in China.
Three-month copper futures lost as much as 0.6 per cent to US$5,162 a metric ton on the London Metal Exchange before trading at US$5,164 at 10.34 am in Hong Kong. Copper also fell in Shanghai.
State-owned Codelco cut its five-year investment plan as falling prices slash earnings, said Chief Executive Officer Nelson Pizarro. The company is reducing its 2015-2019 budget to US$21 billion, or US$22 billion, from the estimate of US$25 billion, Mr Pizarro told reporters in Santiago after a shareholders' meeting on Monday.
"The potential production cuts are insufficient because supply is still perceived as exceeding demand at least in the short term due to weak consumption in China," according to a report by the Huatai Futures Co on Tuesday.
China's refined copper demand is estimated to fall 8.5 per cent in September, according to Huatai. The surplus is forecast to widen as the pace of supply reduction is slower than the demand contraction, the broker said.