Copper Rises on Report BHP's Papua Mine Shut in Pay Dispute
New York, Nov. 26 (Bloomberg) -- Copper had its biggest gain
in almost two weeks on expectations that the shutdown of a BHP
Billiton mine in Papua New Guinea will reduce supplies at a time
when other producers are trimming output.
BHP closed the OK Tedi mine in a dispute with landowners over
compensation for environmental damage, according to Australian
Broadcasting Corp. radio, Reuters reported. The closing comes
after BHP, Phelps Dodge Corp. and Codelco announced output cuts at
other mines, which helped boost copper prices 13 percent from a 14-
year low this month.
The shutdown ``provided some impetus to move higher,'' said
John Tyree, a metals analyst at Fimat Futures USA in New York.
``OK Tedi has had a lot of problems already, and with landowners
shutting the mine, it doesn't help things at all.''
Copper for December delivery rose as much as 1.5 cents, or
2.2 percent, to 69.2 cents a pound on the Comex division of the
New York Mercantile Exchange, the biggest gain since Nov. 13.
Prices are still 18 percent lower than they were a year ago.
BHP officials were unavailable for comment on the OK Tedi
mine, which produces about 200,000 metric tons of copper a year
and accounts for about 10 percent of Papua New Guinea's economy.
BHP has been transferring ownership in the mine to a new company.
Copper prices had dipped as low as 60.35 cents on Nov. 8 as a
U.S. recession reduced metal demand and mining companies were slow
to curb production.
Production Cuts
Prices began to rally after Chile's Codelco, the world's
biggest producer, announced it probably will reduce production
next year. Phelps Dodge, the second-biggest copper producer, and
BHP already had cut output at several mines.
Signs of even lower production may help rally prices until
demand picks up, analysts said.
``Demand is a function of the economy,'' Tyree said.
``There's nothing the industry can do about that. But what the
industry can do is some supply cutbacks. That's what people are
focusing on.''
In London, copper for delivery in three months rose as much
as $33, or 2.2 percent, to $1,515 a ton (68.72 cents a pound) on
the London Metal Exchange. Aluminum rose as much as $45.50, or 3.4
percent, to $1,396 a metric ton on the LME, paring its loss for
the year to 11 percent.
Some analysts are optimistic that the economy has already
reached its lowest point and that demand for metal will improve.
``The markets are anticipating a turnaround in the global
economy,'' said Alan Williamson, an analyst at HSBC Markets in
London. ``The market is looking for good news to go higher.''
Nickel jumped as much as $240, or 4.7 percent, its biggest
intraday gain for two weeks, to $5,380 a ton, amid traders'
expectations of an increase in demand for the metal from stainless
steel makers as economic growth recovers.
--Stephen Voss in the New York newsroom (212) 318-2278 or at
sev@bloomberg.net, with reporting by Jonathan Hurdle in the London
newsroom/ss |
