Copper Rises for Fourth Day on Protest at World's Largest Mine
2006-07-27 06:25 (New York)
By Katy Watson
July 27 (Bloomberg) -- Copper rose in London for a fourth
straight day after Phelps Dodge Corp., the No. 1 U.S. producer,
said demand is growing faster than expected, and on speculation
a protest will curb output at the world's largest mine.
Phelps, based in Phoenix, Arizona, said yesterday global
demand for copper, which is used in wiring, will rise almost 5
percent in 2006, up from its April forecast of 4 percent.
Escondida in Chile faces a steeper drop in production after
workers stepped up a protest over wages, a union spokesman said
yesterday. Mine owner BHP Billiton denied a cut in output.
``The market is obviously very sensitive to any production
interruptions there because supply is very tight compared with
demand,'' said Sean Corrigan, chief investment strategist at
Lausanne, Switzerland-based Diapason Commodities Management SA
which overseas about $5 billion in assets.
Copper for delivery in three months on the London Metal
Exchange rose $55, or 07. percent, to $7,505 a metric ton as of
11:17 a.m. local time. It has gained 71 percent this year, and
traded May 11 at a record $8,800.
Disruption at mines may widen the production shortfall
forecast by some analysts. Credit Suisse Group said in a report
last month that the deficit in 2006 will be 184,000 tons. Global
output of finished metal may rise 5.5 percent this year, down
from an April estimate of 6 percent, Arthur R. Miele, Phelps
Dodge's senior vice president of marketing, said yesterday.
``Because the copper pipeline is so stressed, even modest
production shortfalls will have an immediate and significant
impact on the market balance,'' Miele said in a conference call
with analysts and investors. ``Our overall current outlook for
2006 is for the market to be in modest deficit.''
Strike Vote
Chile's state-owned Codelco, the world's biggest copper
miner, said a July 23 rockslide at its Chuquicamata mine has
reduced daily output by 960 tons, or 35 percent.
``There does seem to be a very steady stream of bullish
stories around,'' said Jeremy Goldwyn, global head of industrial
commodities at Sucden (UK) Ltd., one of the 11 companies trading
on the floor of the LME.
Escondida is producing 40 percent less copper after miners
yesterday began arriving later for work, union spokesman Pedro
Marin said. Workers expect to vote on July 28 to strike next
month, further depressing production, Marin said.
BHP Billiton spokeswoman Alejandra Wood said yesterday from
Santiago that the company is using stockpiles to compensate for
slower ore extraction. The Melbourne-based company owns 57.5
percent of Escondida, Rio Tinto Group owns 30 percent and a
group led by Mitsubishi Corp. owns 10 percent. International
Finance Corp. owns the rest.
Aluminum also gained on the LME, rising $39 to $2,504.
Nickel added $145 to $24,2004, lead was $11 higher at $1,070,
tin was unchanged at $8,350 and zinc gained $45 to $3,240.
UBS AG, Europe's biggest bank by assets, lifted its average
copper price forecast for 2006 to $3.06 a pound, or $6,746 a
ton, from $2.78 previously, citing supply disruption and rising
Asian demand. The bank also raised its 2007 forecast to $3.25 a
pound from $2.65.
--With reporting by Heather Walsh in Santiago, Julie Tay in
London and Choy Leng Yeong in Seattle. Editor: Casey
btw I read elsewhere that the Codelco mine could be impacted for 1 to 3 months, this is major. Say 90,000 tonnes of copper removed from mkt. |
