Copper Reaches One-Month High in London on Strike, Low Stocks
By Matthew Craze
Nov. 15 (Bloomberg) -- Copper rose to its highest in a month
in London as a strike entered its 10th day at Phelps Dodge
Corp.'s El Abra mine in Chile and inventories hit a 15-year low.
Officials at Phelps Dodge, the world's second-largest copper
producer, met for talks with unions at the El Abra mine for the
first time yesterday since the strike began 10 days ago. Miguel
Barraza, a union official, said the strike has affected mine
output. El Abra produces 1.5 percent of the world total.
``As inventories continue to fall it's inevitable that copper
prices will continue to be strong,'' said Ingrid Sternby, an
analyst at Barclays Capital in London, in a telephone interview.
Copper rose $4, or 0.1 percent, to $3,020 at 9:05 a.m. in
London. Copper inventories fell 975 tons to 67,550 tons in LME-
monitored warehouses, their lowest level since August 1990.
The metal, used in power cables and electrical wiring, has
risen 48 percent in the past 12 months on expectations that
worldwide demand will exceed refinery production by about 750,000
tons, according to estimates by Phoenix-based Phelps Dodge.
China's copper demand will surge 13.5 percent this year,
according to industry consultant CRU International. China is now
the world's largest user of the metal. Demand in the U.S., the
second-largest consumer, rose 7.7 percent, according to CRU.
China Demand
China's gap between demand and supply will widen this decade
as the country expands in power supply infrastructure, said Adam
Rowley, an analyst at Macquarie Bank in London.
Demand for copper in the world's most populous nation has
grown at an average of 19.7 percent in the past four years,
Rowley said in an e-mailed report. About 30 percent of this
copper has gone into power cables.
China's demand for copper cathodes is likely to exceed
production from its own refineries by 2.4 million tons in 2010, a
66 percent increase on this year's predicted shortfall of 1.57
million tons, Rowley said.
Power-generating capacity in China will grow by 10 percent
to 385 gigawatts in 2004, while 120 gigawatts of capacity has
been approved by the government or is under construction, Rowley
said. Plans to build a further 100 gigawatts have yet to receive
government authorization.
Copper is the standard conductor metal used in power cables,
according to the New York-based Copper Development Association.
China also uses aluminum in its power cables.
Among other metals, nickel fell $300 to $14,400 while
aluminum fell $8.5 to $1,805. Lead rose $3 to $957 and zinc fell
$5 to $1,111. Tin was unchanged at $9,100.
--Editor: Buckley |
