Codelco's Souper Says Copper May Extend Record Gains 2006-05-16 10:28 (New York)
By Heather Walsh
May 16 (Bloomberg) -- Codelco, the world's biggest copper
producer, said prices of the metal may extend record gains this
year because of possible supply disruptions, low inventories and
purchases by investment funds.
Prices for copper, which have more than doubled in a year,
might surpass a record $4.040 a pound reached in New York on May
11, Codelco's vice president of sales, Roberto Souper, said in
an interview in Santiago. Supply may match demand in 2006,
compared with an earlier estimate by the company for a larger
surplus, he said.
``There are good fundamentals for copper,'' Souper said at
the company's headquarters in Santiago. ``There are low
stockpiles. Expectations for commodities are good and that makes
funds massively get into the market.''
Mining companies failed to anticipate a jump in demand
from China, the world's biggest user of the metal, as well as
the surge in prices, leading to a lack of new mining projects to
help boost supplies, Souper said. Prices, which have surged 79
percent this year in New York, also increase the chance of labor
strikes that disrupt production, he said.
Copper futures for July delivery yesterday fell 11.75
cents, or 3 percent, to close at $3.7465 a pound on the Comex
division of the New York Mercantile Exchange. Prices have risen
more than six-fold from a 14-year low in 2001.
Peak
In February, Juan Villarzu, then Codelco's chief executive,
forecast that the metal's record rally was close to ending. He
expected prices to reach their peak as economic growth slowed
and high prices discouraged demand. This would result in a
200,000 metric ton surplus this year, he said then.
Prices for copper probably will decline at yearend as
supplies of the metal rise, Souper said. In 2007 and 2008,
supplies should outstrip demand for the metal by 270,000 and
250,000 tons, respectively, he said. This year, there may be no
surplus or a surplus of as much as 100,000 tons, he said.
High prices encourage customers to seek substitutes, such
as aluminum, and have slowed growth in demand for the metal in
China while reducing it in Korea, Souper said.
Codelco owns about 20 percent of the world's copper
reserves. Chile is the world's biggest copper producer,
accounting for about 35 percent of output at mines worldwide,
according to the Chilean Copper Commission.
--Editor: Gosman (rhj) |
