Copper Declines in London as Stockpiles Gain, Increasing Supply
2006-03-08 12:44 (New York)
By Chanyaporn Chanjaroen
March 8 (Bloomberg) -- Copper fell for a fourth consecutive
session in London as higher stockpiles increased supply of the
metal, which is used to make plumbing equipment and wiring.
Copper inventory tracked by the London Metal Exchange rose
1.4 percent to 125,725 metric tons, the LME said today in a
daily report. The total has increased 40 percent this year.
``Supply is improving and we are seeing stocks starting to
rise,'' said David Thurtell, an analyst in Sydney at
Commonwealth Bank of Australia, in an interview. ``We are
getting a correction that is long overdue.''
Copper for delivery in three months on the LME dropped $38,
or 0.8 percent, to $4,720 a ton as of 5 p.m. local time. Prices
have tripled in the past three years as demand outpaced output.
Copper traded at a record $5,100 a ton on Feb. 7.
Hedge-fund managers and other large speculators held a net-
short position in New York copper futures in the week ended Feb.
28, according to U.S. Commodity Futures Trading Commission data.
It was the second week since May 2003 that the data has shown
net bets on a price drop instead of a gain. The LME, the world's
largest copper market, doesn't provide equivalent data.
``There's a change in sentiment among big players,'' Jeremy
Goldwyn, global head of industrial commodities at London-based
Sucden U.K. Plc, one of 11 companies that trade on the floor of
the LME, said today in an interview. ``Many said prices went
beyond fundamentals'' of supply and demand.
Citigroup Inc. analyst John Hill forecast in a Feb. 7
report that 2006 will see the first production surplus of copper
since 2002, with output beating demand by 457,000 tons.
Indonesian Allegations
The Indonesian government said it's looking into
allegations of pollution at Freeport-McMoRan Copper & Gold
Inc.'s Grasberg mine, which produces 4 percent of the world's
copper.
``We have two weeks of study to see whether they have
actually'' caused pollution, as alleged by some protesters,
Environment Minister Rachmat Witoelar said in an interview today
in Jakarta.
Freeport suspended operations at Grasberg for three days on
Feb. 22 after demonstrators blocked the road to the site,
demanding they be allowed to sift through ore in the company's
waste piles. A prolonged disruption could boost copper prices,
said analysts including Adam Rowley of Macquarie Bank Ltd.
Copper and other metals will average more than previously
forecast this year as the economies of the biggest consuming
nations expand, JPMorgan Chase & Co. said yesterday. Copper will
average $4,190 a ton this year, compared with a previous
forecast of $3,900, it said. Aluminum prices will average $2,180
a ton, compared with an earlier estimate of $2,075.
Other metals also dropped on the LME. Aluminum fell $5, or
0.2 percent, to $2,340 a ton. Nickel lost $210, or 1.4 percent,
to $14,700 and lead rose $5, or 0.4 percent, to $1,175 ton.
Zinc slipped $18, or 0.8 percent, to $2,230 and tin was
Lost $100, or 1.3 percent, to $7,700 a ton.
--With reporting by Damien Ryan in Hong Kong, Claire Leow and
Bernard Lo in Jakarta. Editor: Casey (jwc/sjc/dje). |
