Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: Stephen O who wrote (917)	11/8/2001 3:49:22 PM
From: Stephen O	Respond to of 1643

Copper Has Biggest Gain Since August After BHP Production Cuts. ( Merril Lynch quits Canada, big mistake. how good is their copper call after today's news about cutbacks.) New York, Nov. 8 (Bloomberg) -- Copper futures had their biggest gain in two months after Australia's BHP Billiton said it will cut production by 170,000 metric tons a year at mines in Chile and Peru because of low prices. The reduction includes an immediate drop of 80,000 tons, or 10 percent, at BHP's Escondida copper mine in Chile, the world's largest. Prices have plunged 27 percent this year, reaching a 14- year low. Mining companies have been slow to lower production as weakening economies curbed demand for wire and pipes. ``More cuts are needed because the market is still going to have excess supplies,'' said Frederick Demler, an analyst at ED&F Man Group in New York. BHP's cuts ``are a surprise, because these mines are some of the lowest-cost mines in the world,'' he said. Copper for December delivery rose 0.9 cent, or 1.5 percent, to 61.5 cents a pound on the Comex division of the New York Mercantile Exchange, the biggest one-day gain for a most-active contract since Aug. 27. Prices touched a 14-year low of 60.35 cents in early electronic trading before the BHP report. In London, copper for delivery in three months rose $20.50, or 1.5 percent, to $1,359 a metric ton (61.64 cents a pound) on the London Metal Exchange. In addition to the reduction in Chile, BHP said it would trim annual production at its Tintaya mine in Peru by 90,000 tons a year, beginning in January BHP this week said earnings from its base metals unit during the three-month period ended Sept. 30 were down 62 percent from a year earlier because of lower copper, silver and zinc prices. Escondida Profitable Two years ago, the company, then known as Broken Hill Proprietary Co., closed its copper mines in Arizona and Nevada because of low prices and high production costs. Even with this year's decline in copper prices, Escondida still is earning a profit, because its cost of production is less than 50 cents a pound, according to George Cheveley, research manager at London-based research firm CRU International. ``The Escondida cut is a market-related cut to improve market prices,'' he said. BHP was the second major mining company to announce a production cut. Phoenix-based Phelps Dodge Corp. -- the second- biggest copper producer after Chile's Codelco -- announced Oct. 23 that it would reduce output by 220,000 tons a year, or 16 percent. Codelco last Friday said its copper output rose 6 percent in the first nine months of the year. The state-owned company reaffirmed its intention to boost annual production 25 percent from 2000 levels by 2006. Global copper production exceeded demand by 339,000 tons during the first eight months of the year, the Lisbon-based International Copper Study Group said Tuesday. Copper inventories have soared with the decline in demand. Supplies in warehouses monitored by the London Metal Exchange have more than doubled this year, reaching an 18-month high of 748,100 tons on Oct. 10. --Claudia Carpenter in the New York newsroom (212) 318-2346 or at ccarpenter2@bloomberg.net with reporting by Jon Hurdle in the London newsroom/jb