Japan smelters may extend spot copper buying
Reuters, 01.20.04, 11:14 PM ET
By Robin Paxton
SINGAPORE, Jan 21 (Reuters) - Japanese buyers of copper concentrate from the giant Grasberg mine, damaged in a rock slide last month, are considering extending deliveries from alternative suppliers into the second quarter of the year, traders and smelter officials said on Wednesday.
Smelters in Japan are concerned the mine, run by the Indonesian unit of Freeport McMoRan Copper & Gold Inc (nyse: FCX - news - people), might not be able to meet their full demand for copper concentrate in the second quarter.
Grasberg has been running at below capacity since the rock slide on December 12, prompting Freeport to declare force majeure on some shipments.
"We have enough concentrate for the first quarter. We heard the Freeport news today and we are investigating our position again," a copper concentrate buyer for a major Japanese smelter told Reuters.
Freeport McMoRan said on Tuesday it expected to restart mining at Grasberg's key ore areas during the second quarter but would defer higher-grade ore mining to future periods.
The company said a significant portion of 2004 sales would not take place until the second half of the year. It said first-quarter sales of copper were expected to fall 45 percent from the fourth quarter of 2003 to 90 million pounds. Traders said Japanese smelters had agreed to buy more spot copper concentrate, particularly from Chile, in first-quarter 2004 to cover the shortfall from Freeport.
BHP Billiton Plc/Ltd's <BHP.AX> <BLT.L> huge Escondida mine in Chile restarted full output from the beginning of the year.
"(Japanese smelters) had covered the first quarter but were expecting full production at Grasberg from April," a trader in Tokyo said.
"The market is getting tighter and tighter, worse and worse for people who have to secure material for short cover," he said.
On Tuesday, Freeport lowered its forecast for Grasberg's 2004 copper sales to 1.0 billion pounds from 1.4 billion and cut its gold sales forecast to 1.5 million ounces from 2.2 million.
"Freeport is not going to produce at 100 percent tomorrow. They'll gradually increase their tonnages," a copper trader in Singapore added.
Copyright 2004, Reuters News Service |
