Copper Rises, Reaching Record in London, After Strike in Chile
2005-12-07 12:35 (New York)
By Claudia Carpenter
Dec. 7 (Bloomberg) -- Copper rose in New York and reached a
record in London after railroad workers in Chile, the biggest
producer of the metal used in pipes and wiring, went on strike,
triggering supply concerns.
About 368 workers walked off the job at midnight at
Ferrocarril de Antofagasta a Bolivia, said Luis Ortiz, a union
secretary. The railroad carries copper produced by companies such
as state-owned Codelco. Copper prices have climbed 49 percent in
the past year as demand outpaced supply, forcing manufacturers to
use their own inventories.
``It's really a question how long the strike lasts,'' said
Marc Morgan, a trader at Triland USA Inc. in New York. ``A 24-hour
strike won't be a problem. A 24-month strike will mean something.''
Copper futures for March delivery rose 4.1 cents, or 2.1
percent, to $2.028 a pound at 12:34 p.m. on the Comex division of
the New York Mercantile Exchange. The most-active contract reached
$2.03, the record on Dec. 2. A futures contract is an obligation to
buy or sell a commodity at a set price for delivery by a specific
date.
On the London Metal Exchange, copper for delivery in three
months rose $81, or 1.9 percent, to a record $4,458 a metric ton
($2.0218 a pound).
Codelco doesn't expect the strike to interrupt transport at
its northern division, the company's largest, because the railroad
said it will use trucks to transport the copper, said Roberto Vial,
a spokesman for the division.
The railroad is using some non-union workers to run its
trains, said Marcos Lepe, who oversees the train's office in
Calama, the base of Codelco's northern division.
`Bullish'
``Any disruption to supply is bullish for the copper market,''
said Marc Kaplan, president of Mews Metals Trading LLC in Verona,
New Jersey.
Chile's copper production fell 2.7 percent in the eight months
ended August, partly amid mining disruptions, according to the
Lisbon-based International Copper Study Group.
Prices in New York opened higher after China sold stockpiles
of the metal at prices higher than last week. The government's
State Reserve Bureau sold 3,400 tons today for as much as 39,050
yuan ($4,835) a ton, up from 38,300 yuan in the Nov. 30 auction,
traders said.
China may be selling as part of an effort to settle wrong-way
bets by a trader at a government agency.
``This whole thing remains ludicrous that the government won't
spell out very clearly where the whole thing stands,'' said John
Gross, director of metals management at Scott Brass Inc. in
Cranston, Rhode Island. ``Commodity funds are buying the metals
right across the board.''
LME Stockpiles
Stockpiles monitored by the LME dropped for a second day,
heightening concern that mining companies are not producing enough
to meet demand.
Some copper distributors expect November to be the best month
this year, said Frank Brown, executive vice president of the Copper
& Brass Servicenter Association. Shipments of copper and brass
parts from U.S. and Canadian distributors in October were 5.8
percent higher than a year earlier, the Wayne, Pennsylvania-based
association said.
``Despite very high prices, demand is holding up reasonably
well,'' Gross of Scott Brass said.
Prices on the Shanghai Futures Exchange climbed 0.3 percent.
--With reporting by Heather Walsh in Santiago and Xiao Yu in
Beijing. Editor: McKiernan |
