Copper Jumps 4.2% on Concern Chilean Output May Be Disrupted
By Halia Pavliva
Jan. 10 (Bloomberg) -- Copper prices in New York jumped 4.2 percent, the most in 12 weeks, on concern output by Chile's state-owned Codelco, the world's biggest producer, may be disrupted.
Codelco said yesterday a rockslide may occur at the Chuquicamata mine, the company's largest. A cave-in there last year cut output. Copper prices reached a record $4.04 a pound in May after strikes and mine accidents curbed production.
``Chile is still struggling to boost its output of copper and other non-ferrous metals, lagging behind producers in Africa and Asia,'' John Kemp, a London-based analyst at Sempra Metals, said in a report.
Copper futures for March delivery increased 10.8 cents to $2.664 a pound on the Comex division of the New York Mercantile Exchange, the biggest gain since Oct. 16. The metal rose 1.1 percent yesterday, snapping a six-session slide.
The metal has dropped 7.2 percent this month after climbing 41 percent in 2006, the fifth-consecutive annual gain.
A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.
Copper users in China, the world's largest consumer of the metal, may rebuild stockpiles after prices tumbled, according to a Bloomberg survey yesterday of seven analysts, traders and processors.
Asian Demand
China accounts for 20 percent of the annual world's copper consumption, while Asia accounts for 50 percent, John Tumazos, senior vice president at Prudential Equity Group LLP, said yesterday. The U.S. consumes about 13 percent of the metal, and Europe accounts for 20 percent of the annual consumption, he said.
``So maybe people are thinking too much'' about the U.S. economy, Tumazos said.
Prices gained, even as global inventories climbed to the highest in more than two years. Stockpiles at warehouses monitored by commodity exchanges in London, Shanghai and New York were at 264,628 tons, the highest since June 2004, according to data compiled by Bloomberg.
Copper prices tumbled 17 percent in the fourth quarter as inventories climbed and demand dwindled.
``The Codelco story could cause some nervousness, but copper needs to put together a string of gains'' before buyers ``come back in any meaningful way,'' Edward Meir, an analyst at Man Financial Inc. in Darien, Connecticut, said in a report.
To contact the reporters on the story: Halia Pavliva in New York at hpavliva@bloomberg.net .
Last Updated: January 10, 2007 14:29 EST |
