Phelps Dodge slashes production, cuts 1,500 jobs
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NEW YORK, Oct 23 (Reuters) - Phelps Dodge Corp. (NYSE:PD - news), the world's second-largest copper producer, said on Tuesday it will slash production, cut nearly 1,500 jobs and eliminate its quarterly dividend after posting a third-quarter loss on lower prices and weak demand.
The move to decrease copper production by 220,000 metric tonnes, or 14.3 percent of annual capacity led to a surge in market prices of the metal as it will help reduce the current oversupply.
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Chief Executive J. Steven Whisler said Phelps Dodge had already taken 300,000 tonnes, or more than 18 percent, of its annual copper production offline. With Tuesday's action, it will have reduced copper output by about one third since early 1999.
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Whisler said the copper market is currently ``out of balance'' by more than 500,000 metric tonnes. ``A cutback of any magnitude has been long coming given the weak environment that we've been experiencing, plus very, very high (copper) inventories,'' said John Gross, president of consulting firm J.E. Gross & Associates
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But on Tuesday, copper prices jumped on news of the production cuts, and a round of short covering sent them even higher. On the London Metal Exchange, three-months copper -- which had fallen to 14 1/2 year lows on Monday -- surged $45 a tonne to $1,414. COMEX December copper futures charged up 2.20 cents to a high at 64.70 cents a lb
COMEX copper soars on Phelps Dodge output cuts
biz.yahoo.com
NEW YORK, Oct 23 (Reuters) - COMEX copper futures jumped Tuesday morning after U.S. mining giant Phelps Dodge Corp. (NYSE:PD - news) slashed 220,000 tonnes of copper production annually due to soft economic conditions and low metal prices, traders said.
Floor sources at the New York Mercantile Exchange said the Phelps Dodge news boosted prices at its COMEX trading division, even though many market players had expected production cuts as copper this week hit new multiyear lows. ``There was a little bit of fund buying and some arbitrage (from London) that was trade buying,'' said one broker. "But we are really just retracing a lot of what we did last week. So although the news is bullish, there was a lot of work already done at these levels.
Copper for December delivery <0#HG:> had climbed 1.85 cents to 64.35 cents a lb at 1033 EDT (1433 GMT), after trading between 62.40 and 64.70 cents. Spot October copper was up 1.20 cents at 63.30 a lb and other contracts stood 1.05 to 1.85 higher. World copper prices on Monday tumbled to 14-year lows at about 62 cents a lb as metal oversupply and weak demand met with a dim economic outlook, which was worsened by the Sept. 11 attacks on U.S. landmarks. Copper in March 2001 fetched about 80 cents a lb.
Traders and analysts said prices could rise another cent or so now that copper has reached oversold levels on technical charts and inventories have begun declining recently. Phelps Dodge, the world's No. 2 copper maker, said Tuesday it will temporarily close some Arizona and New Mexico mines and plants and operate others at half-capacity in a series of actions to be completed by January 15, 2002.
A company statement said about 1,440 workers in the Southwest will be laid off at locations including mines, smelting plants and refineries in Chino, New Mexico, and Miami, Sierrita and Bagdad, Arizona ``This temporary curtailment plan will reduce copper production while maintaining our core work force and the operational readiness of our properties so that resumption of the shuttered production can be effected quickly and efficiently,'' chairman, president and chief executive J. Steven Whisler said. In the plan, Phelps Dodge will maintain its internal production and consumption balances of concentrate, sulfuric acid and copper anodes and its U.S. rod mills will not be affected.
In overseas metal trading, London Metal Exchange three-months copper shot up $43 to $1,412 a tonne following the morning ring sessions. A number of industry players meeting in London for LME Week left volumes slightly muted in the market, however, dealers said. Official turnover for COMEX copper was not immediately available. LME warehouse stocks on Tuesday slipped 1,600 tonnes to 736,300 tonnes. COMEX inventories rose 557 short tons to 207,909 tons. |
