Copper Gains the Most in a Week as Chilean Miners Strike
2005-07-04 12:51 (New York)
By Chanyaporn Chanjaroen
July 4 (Bloomberg) -- Copper futures in London rose the most
in a week after Placer Dome Inc. said a strike at its Zaldivar
mine in Chile may cut daily production by a quarter.
Mine workers began striking over a wage dispute today. The
walkout may reduce the mine's copper production, projected at
150,600 metric tons this year, by 25 percent each day of the
strike, said Felipe Ruiz, a spokesman at Zaldivar. That added to
concerns about supplies, with London Metal Exchange-monitored
stockpiles at their lowest for more than three decades.
``We can see prices going up on the strike because of the low
stock level,'' Anindya Mohinta, an analyst at JPMorgan Chase & Co.
in London, said by telephone today.
Copper for delivery in three months on the LME rose $26, or
0.8 percent, to $3,233 a ton, its first gain in three trading
sessions. Copper has gained 2.6 percent this year, after adding 37
percent last year.
Still, traders are more concerned about global smelting
capacity than mine production, Mohinta said. Mines mostly supply
smelters with concentrate, an intermediate product that is refined
into metal.
``The strike will have to happen over a long period of time,
like two to three months'' so that the decline in concentrate
supply becomes an issue for smelters, Mohinta said.
Zaldivar's projected production this year is equal to less
than 1 percent of global copper demand, as estimated by the Lisbon-
based International Copper Study Group.
Mine Disruptions
Other recent mine disruptions in South America didn't bolster
prices much. BHP Billiton's Cerro Colorado mine in Chile was shut
from June 13 due to an earthquake and resumed partial production
on July 1. Prices have declined $65 since June 10.
Asarco Inc. workers at the company's Mission and Silver Bell
mines voted to join a strike over pay, Arizona Daily Star
reported, citing Terry Bonds, an official with the United
Steelworkers of America labor union. Asarco is the second-largest
copper producer in the U.S.
The 200 mine workers were due to strike from 12:01 a.m. local
time today, the newspaper said. More than 1,200 Asarco workers are
striking, the paper said. A further 300 refinery workers in
Amarillo, Texas will vote today whether to join them.
``A strike that lasts two to three weeks would boost
prices,'' Bhar said. Asarco plans to produce 212,000 tons of
copper this year, 37 percent more than last year, the company's
president, Daniel Pellechea, said June 20.
Hedge-fund managers and other large speculators increased
their short positions, or bets prices will fall, to 21,136
contracts on the Comex division of the New York Mercantile
Exchange in the week ended June 28, according to U.S. Commodity
Futures Trading Commission data. The short positions are the
highest since May 2003.
`Significant Room'
Net long positions fell by 2,072 contracts to 20,711
contracts, the Washington-based commission said.
The gross short positions on Comex copper leaves
``significant room'' for a rally in copper prices if funds have to
cover their short positions, Ingrid Sternby, an analyst at
Barclays Capital in London, said today in a report.
Among other metals for delivery in three months on the LME,
aluminum rose $9, or 0.5 percent, to $1,697 a ton. Nickel dropped
$390, or 2.7 percent, to $14,100 and lead fell $1, or 0.1 percent,
to $864. Tin rose $65, or 0.9 percent, to $7,245 and zinc lost
$7.50, or 0.6 percent, to $1,190.50.
--With reporting by Heather Walsh in Santiago. Editor: Carrigan,
Wallace |
