NEW YORK, June 4 (Reuters) - COMEX copper futures jumped to a one-year high on Tuesday on fund buying after Grupo Mexico SA (Mexico:GMEXICOB.MX - News) announced a surprise copper production cut and snowstorms in Chile closed a copper plant there, dealers said.
July delivery copper (O#HG:) soared 1.35 cents, or 1.7 percent, at 1258 EDT to 79.20 cents a lb, trading from 76.80 to 79.45 cents, as the news triggered stop-loss buying to push futures past April's high of 77.75 cents.
"We are seeing some really good fund buying. That, and the fact that the market has been in an uptrend, is holding prices up," said a COMEX floor trader. The COMEX is a division of the New York Mercantile Exchange.
It was the highest price for COMEX copper futures on a weekly continuation chart since early June 2001.
Slack demand in the copper market and high global inventories have pressured prices over the last year, although values have inched up from 14-year lows near 60 cents last November.
During the fourth quarter, world producers began a new round of copper production cuts to alleviate the weight of oversupply on prices.
New York futures last week broke out of a two-month-old 71-75 cents range when base metal miner BHP Billiton (Australia:BHP.AX - News; London:BLT.L - News) sparked hopes for a new round of producer cuts by slashing output at its majority-owned Escondida mine in Chile due to soft demand.
Grupo Mexico, the world's No. 3 copper producer, announced today that it would shut operations at its Cananea copper unit, cutting 150,000 tonnes in annual output, after it could not meet workers' demands for higher wages.
"The closure of Cananea will reduce copper production for (Grupo Mexico) by about 150,000 tonnes annually, which, added to production cuts of 193,000 tonnes at Phelps Dodge (NYSE:PD - News), 104,000 tonnes at (Chile's state-owned) Codelco, 120,000 tonnes at BHP Billiton (Australia:BHP.AX - News) and 140,000 tonnes at (Grupo's U.S. unit) Asarco, represent more than 700,000 tonnes in global annual cuts, which will contribute to a better market performance," a company statement said.
The Mexico City-based mining company said the shutdown of Cananea in northern Mexico would last until market conditions made it possible to operate there again and labor authorities resolved their dispute with the company.
According to Grupo Mexico, workers at Cananea, in the state of Sonora, and at Nueva Rosita, in Coahuila, have vowed to begin a strike after accusing Grupo Mexico of violating their job contracts. Grupo said workers had demanded a 16.3 percent wage hike.
Separately, a power blackout caused by an intense snowstorm in Chile halted copper production at the Los Bronces mine, owned by a unit of Exxon Mobil Corp. (NYSE:XOM - News), a company spokesman said Tuesday.
Central and southern Chile have been hit by the worst storms in more than 100 years since Sunday.
"The power was cut late last night and today we are not producing," Guillermo Garcia, spokesman at Exxon's Chilean unit Disputada, told Reuters. Garcia said the company was working to reestablish electricity supply but could not say when operations would resume.
The leaching plant at Los Bronces has a daily treatment capacity of 5,000 tonnes of mineral. The mine produced 183,000 tonnes of copper in 2001. |
