Copper Gains, Capping Ninth Quarterly Gain, on Supply Concern
2006-09-29 14:30 (New York)
By Chanyaporn Chanjaroen
Sept. 29 (Bloomberg) -- Copper rose, capping the ninth
straight quarterly gain, on speculation that a walkout by
workers at the Highland Valley mine in Canada will further erode
supplies of the metal used in pipes and wires.
Workers voted to strike Oct. 1 unless an agreement is
reached with mine owner Teck Cominco Ltd. Copper prices in
London rose 3.1 percent this quarter as disruptions at mines in
Asia and South America cut output. The metal quadrupled in the
past three years, reaching a record in May as demand grew.
``There's a large potential for problems out there, and
people are not comfortable'' with the outlook for supplies, said
Kevin Tuohy, a trader at Man Financial Ltd., one of 11 companies
dealing on the floor of the London Metal Exchange.
Copper for delivery in three months gained $75, or 1
percent, to $7,545 a metric ton on the London Metal Exchange.
Prices reached a record $8,800 on May 11 and have almost doubled
in the past year. The metal was unchanged this week.
On the Comex division of the New York Mercantile Exchange,
copper futures for December delivery rose 3.25 cents, or 0.9
percent, to $3.4605 a pound. Prices were up 0.5 percent for the
week.
Highland Valley, located in British Columbia, produced
179,000 tons of copper in 2005, about 1.2 percent of the 14.9
million tons that the Lisbon-based International Copper Study
Group estimates companies mined around the world last year.
Codelco, the world's largest copper producer, started
negotiations with workers at its Andina mine yesterday. Miners
are seeking a wage offer that tracks a surge in copper prices,
while the company offered a pay increase of 3 percentage points
above inflation, plus a bonus.
Supply Shortfall
A production shortfall has forced consumers to tap
stockpiles. Copper inventories monitored by the LME fell 3,800
tons, or 3.1 percent, to 117,575 tons today, the biggest drop
since June 13. Stockpiles are equal to less than three days of
global consumption.
Inventories tracked by the Shanghai Futures Exchange fell
22 percent to a 22-week low of 33,549 tons from a week ago.
Markets in China, the world's largest consumer of the metal,
will be closed for a national holiday next week.
Copper needs to close above $7,600 a ton to spur buying
from investors tracking price charts, Man Financial's Tuohy
said. Five of 11 analysts, investors, traders and consumers
surveyed yesterday and on Sept. 26 by Bloomberg News said copper
will fall next week. Four said it will rise, and two forecast
little change.
A futures contract is an obligation to buy or sell a
commodity at a specific price and date.
--With reporting by Feiwen Rong in Singapore, Heather Walsh in
Santiago and Saijel Kishan in London. Editor: Casey
(kkl/sds/pjm) |
