Copper Prices Rise on Speculation More Producers Will Cut Back
New York, Oct. 26 (Bloomberg) -- Copper futures rose for a
second session on speculation that other mining companies will
join Phelps Dodge Corp. in cutting production to boost prices from
two-year lows.
While demand has weakened for wire and pipes as economies
slowed, producers have been reluctant to cut back. The 220,000-
metric-ton reduction next year announced Tuesday by Phelps Dodge,
the second-largest producer, amounts to 1.7 percent of world
output last year.
``We need another cut,'' said Warren Gelman, president of
Kataman Metals Inc. in St. Louis. ``There's too much copper
around.''
Copper for December delivery rose as much as 1.3 cents, or
2.1 percent, to 63.90 cents per pound on the Comex division of the
New York Mercantile Exchange.
Copper has been trading at or close to a two-year low since
mid-June, falling as low as 62 cents a pound on Monday, the lowest
price since June 1999. While prices have risen 2.5 percent this
week, they are down 26 percent from this time last year.
Contributing to today's rally was speculation that Grupo
Mexico SA, the No. 2 copper producer, would soon join Phelps Dodge
in announcing output cuts, Gelman said.
Hector Garcia de Quevedo, a spokesman for Grupo Mexico in
Mexico City, said the company was preparing to issue an earnings
report later today, but it won't include any change in copper
production plans.
``We are not planning at this moment to do anything,'' he
said. ``We are not closing any mines.''
Codelco
Chile's state-owned Codelco, the largest producer, has
announced its intention to boost annual production by 25 percent
from 2000 levels to 2 million tons by 2006. Codelco has lower
mining costs than Phelps Dodge, and Chile depends upon copper for
more than 40 percent of its export revenue.
Copper inventories in warehouses monitored by the London
Metal Exchange have more than doubled this year as demand
weakened. They reached an 18-month high of 748,100 tons on
Oct. 10.
Copper for delivery in three months rose $17, or 1.2 percent,
to $1,396 a ton (63.32 cents a pound) on the LME.
--Stephen Voss in the New York newsroom (212) 318-2278 or at
sev@bloomberg.net with reporting by John Moody in Mexico City/jb |
