Copper Falls on Speculation Mining Companies Are Delaying Cuts
New York, Feb. 22 (Bloomberg) -- Copper fell 2 percent on
speculation that some mining companies have delayed production
cuts promised last year after a worldwide economic decline sent
prices to a 14-year low.
Global supplies of copper monitored by the London Metal
Exchange have risen 12 percent this year to a record 894,650
metric tons. Prices had gained as much as 25 percent from the
November low on output cuts promised by mining companies including
Phelps Dodge Corp., the second-largest producer.
``The cuts have not kicked in to the extent that they should
have by now,'' said Jim Steel, director of commodity research at
Refco Inc. in New York. The rally ``may have slowed the
implementation of the cuts.''
Copper for March delivery fell 1.45 cents to 70 cents a pound
on the Comex division of the New York Mercantile Exchange, the
lowest closing price since Jan. 30. Prices fell 4.6 percent this
week and were down 13 percent from a year earlier.
In London, copper for delivery in three months fell $23, or
1.5 percent, to $1,543 a metric ton (69.99 cents a pound) on the
London Metal Exchange.
Phelps Dodge was joined by Chile's state-owned Codelco, the
biggest producer, and Australia's BHP Billiton in promising
production cuts in 2002 totaling 490,000 tons.
Phelps Dodge is ``on target'' to meet its pledged cutback of
220,000 tons by the end of the year, said spokeswoman Danielle
Sittu. ``The mining rate has been cut,'' she said, without
elaborating.
Codelco is following through with its promised cutback of
100,000 tons, said spokesman Ivan Badilla.
Weak Demand
Global copper inventories have continued to rise since the
production cuts were announced beginning in late October. Supplies
in London exchange-monitored inventories have almost tripled in
the past year, as recession curbed demand for wire and pipes in
the U.S. and other leading users of the metal.
``People are seeing these big increases in the stockpiles,
and they may be assuming that producers are putting out extra
production,'' said Tony Warwick-Ching, a consultant at CRU
International in London. ``The problem is demand is flat. There's
no recovery yet.''
--Claudia Carpenter in the New York newsroom (212) 318-2346 or at
ccarpenter2@bloomberg.net with reporting by Thomas Tugendhat in
London and Heather Walsh in Santiago. Editor: Bixby |
