Copper Rises on Concern Arizona, Chile Strikes May Cut Output
2005-07-08 10:18 (New York)
By Jennifer Itzenson
July 8 (Bloomberg) -- Copper prices rose in New York,
heading for their biggest weekly gain in a month, on concern that
strikes at mines in Arizona and Chile may reduce output and erode
global inventories that are the lowest in 30 years.
A strike at Placer Dome Inc.'s Zaldivar mine in Chile
entered its fifth day. Union members at a refinery owned by the
Asarco unit of Grupo Mexico SA in Amarillo, Texas, on July 6
joined the walkout by workers at the company's Arizona mining and
smelting operations. Copper stockpiles tracked by the London
Metal Exchange are down 71 percent in the past year.
``People who speculate in the copper market are looking at
it and saying it's already a tight market, let's put some money
in it,'' said Joseph Gartland, vice president at Willow Grove,
Pennsylvania-based H.M. Hillman Brass & Copper Inc., a supplier
of parts to power plants and shipbuilders. ``The psychology of
the strike, more than anything else,'' has been driving prices,
he said.
Copper futures for September delivery rose 1.85 cents, or
1.2 percent, to $1.554 a pound at 10:14 a.m. on the Comex
division of the New York Mercantile Exchange. A close at that
price would cap a 5.5 percent gain for the week. Copper has
climbed 22 percent in the past year and reached a 16-year of
$1.61 on June 17.
In London, copper for delivery in three months climbed $41,
or 1.2 percent, to $3,356 a metric ton ($1.522 a pound). Copper
for delivery in July on the Shanghai Futures Exchange rose 90
yuan to 33,010 yuan ($3,988) a ton.
London Bombings
The London Metal Exchange, located 400 meters from one of
the subway stations struck in yesterday's terrorist bombings,
opened its trading floor today. The exchange closed yesterday
after bombs exploded on the city's subway system and a bus,
killing at least 50 people and wounding more than 700.
Following the attacks, prices in New York fell as much as
2.4 cents before ending the day higher.
``Short-term, I think everybody gets skittish,'' Gartland
said. ``Things will settle back to normal pretty quickly.''
Inventories monitored by the LME dropped 1 percent today to
29,150 metric tons, the lowest since July 1974. Stockpiles are
headed for their third straight yearly decline, the longest slump
since the drop from 1994 to 1996.
``Strikes at Asarco and at Placer Dome's Zaldivar mine in
Chile are supporting values,'' Edward Meir, a commodity analyst
with Man Financial Ltd. in Darien, Connecticut, said today in a
report.
Lower Production
Asarco's annual production may fall by 100,000 to 125,000
tons because of the strike, the company said on July 4. Asarco
Chief Executive Daniel Tellechea didn't immediately return a call
for comment. Grupo Mexico said this week that the unit is
producing copper at a reduced pace with the help of non-union
workers.
Terry Bonds, head of the United Steelworkers Union District
12 office, said yesterday that there aren't any talks scheduled
with the company. Bonds didn't immediately return a call today.
The strike at Placer Dome's Zaldivar mine cut the mine's
production of cathodes, or almost pure copper, by 45 percent on
July 5, Felipe Ruiz, a spokesman for Zaldivar, said yesterday.
Global Demand
Global demand will increase 3 percent this year to 17.4
million tons, exceeding production by 50,000 tons, according to
forecasts from Societe Generale.
U.S. manufacturing accelerated in June for the first time in
seven months and auto sales surged, according to separate reports
released July 1. New-home sales rose in May to the second-highest
level ever, the Commerce Department said last month.
Construction is the biggest use for copper. The average U.S.
home contains about 400 pounds of the metal, according to
industry estimates.
A futures contract is an obligation to buy or sell a
commodity at a set price by a specific date.
--With reporting by Simon Casey in London. Editor: Stroth. |
