Copper May Head for Weekly Gain in London on Supply Disruption
2005-11-25 10:07 (New York)
By Simon Casey
Nov. 25 (Bloomberg) -- Copper may rise for a sixth
consecutive week in London on speculation an explosion at an
Indian smelter will curb supplies of the metal, analysts said.
Production may be delayed at Birla Copper, a unit of India's
Hindalco Industries Ltd., after an explosion at a plant in the
state of Gujurat, Reuters reported. The company declared ``force
majeure,'' Reuters reported Hindalco Executive President P.
Balakrishnan as saying. Force majeure allows a company to cancel
delivery due to unforeseen events.
``Birla's news once again highlights the lack of shock
absorbers and the vulnerability of the copper market to supply
side disruptions,'' said Ingrid Sternby, an analyst in London at
Barclays Capital, in an e-mailed report today.
Copper for delivery in three months on the London Metal
Exchange rose $18, or 0.4 percent, to $4,211 a ton as of 2:36 p.m.
local time. The metal, used in wiring and plumbing, earlier rose
as high as $4,230.50, $12.50 short of the record set on Nov. 18.
Birla's production problems follow disruption at other mines
and smelters this year. Stephen Briggs, a London-based analyst at
Societe Generale, in a Nov. 21 report doubled his forecast
production shortfall for this year to 500,000 metric tons.
Next year there will be a shortfall of 200,000 tons, Credit
Suisse First Boston said in a Nov. 21 report. Prices may almost
double in the next two years because of lagging supply, the bank
said.
Supply Disappoints
``People have been expecting the market to turn into a
surplus for some time, but supply continues to disappoint,'' said
David Thurtell, an analyst in Sydney at the Commonwealth Bank of
Australia, in a television interview today.
Output has been curbed this year in Chile, the world's
largest copper-producing nation. The Collahuasi mine, owned by
Falconbridge Ltd. and Anglo American Plc, lost 20,000 tons of
production in the first half of this year due to a conveyor system
failure. Cerro Colorado, a mine owned by BHP Billiton, the world's
largest mining company, lost output after an earthquake in June.
A fuel shortage in Zambia, Africa's largest copper-producer,
cut output at plants operated by Glencore International AG and
Vedanta Resources Plc in October.
Asarco LLC, the second-biggest U.S. copper producer, said
Nov. 8 it reached an agreement with unions to end a four-month
strike at plants and mines in Arizona and Texas. The dispute cut
Asarco's output by about half, the company said in August.
Stockpiles Drop
Copper stockpiles monitored by the Shanghai Futures Exchange
dropped 112 tons to 74,272 tons, the exchange said today in a
weekly report. The LME said today in a daily report that the
copper the exchange tracks in its warehouses fell 175 tons to
70,350 tons.
Aluminum rose $16, or 0.1 percent, to $2,090 a ton. Yesterday
it traded at a 10-year high of $2,096.
Zinc increased $12 to $1,661. Earlier it traded at an eight-
year high of $1,665. The shortfall in zinc production in 2006 may
be greater than in either 2005 or 2006, said Zinifex Ltd., the
world's second-largest producer of the metal.
``Increasingly in today's market the production of zinc and
to a lesser extent lead are constrained by the availability of raw
materials,'' the Australian company's Chief Executive Officer
Greig Gailey said today at a shareholders meeting.
Nickel dropped $85 to $12,965 a ton, lead was $7 higher at
$995 and tin fell $20 to $6,130. |
