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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (9823)	7/25/2004 10:27:36 PM
From: mishedlo	Respond to of 116555

Copper Has Biggest Drop in Six Weeks After Mexico Bans Strikes July 23 (Bloomberg) -- Copper prices in New York had their biggest decline in six weeks after Grupo Mexico SA, the world's third-biggest copper producer, won a ruling to stop two strikes that threatened to reduce half of the company's production. Mexican labor mediators declared illegal a strike by 2,000 workers at Grupo Mexico's La Caridad facility and a possible strike by another 1,200 workers at the Cananea mine, the union and company said. Copper prices rose to a six-week high on July 12 when the La Caridad strike began. ``There will be more'' copper available, ``especially in Mexico now,'' said Warren Gelman, president of Kataman Metals Inc. in St. Louis. ``Things were starting to tighten up and we thought Cananea was going out'' on strike today, he said. Copper futures for September delivery fell 3.9 cents, or 3 percent, to $1.248 a pound on the Comex division of the New York Mercantile Exchange, the biggest one-day decline since June 9 and the lowest closing price since July 6. Prices fell 4.8 percent this week, the first decline in six weeks. A futures contract is an agreement to buy or sell a commodity at a specified price and date. Shares of Phoenix-based Phelps Dodge Corp., the world's biggest publicly traded copper producer, dropped $1.56, or 2.1 percent, to $72.98 at 1:48 p.m. in New York Stock Exchange composite trading. Shares of Grupo Mexico rose 0.6 peso to 36.20 pesos on the Mexican Stock Exchange. Before today, the stock fell 5 percent since the strike began on July 12. Dollar Cost Rises The drop in copper prices accelerated as a rise in the dollar boosted the cost of the dollar-priced metal for buyers using euros, said Daniel Vaught, an analyst at A.G. Edwards & Sons Inc. in St. Louis. Prices in China, the world's biggest buyer of copper, dropped 2.2 percent, the biggest decline in three weeks, after the Mexican labor ruling was announced. Grupo Mexico said yesterday it hopes to resume operations at La Caridad. The ruling means workers must return to work by 2 p.m. in Mexico City today or they can be fired or replaced by new workers. Any workers that impede new workers from entering the mines would face arrest. The union condemned the ruling, and its members will vote today on whether to respect the mediator's judgment, spokeswoman Consuelo Aguilar said. ``This move declaring the strikes illegal, coming when it did, probably did spark some Chinese selling,'' Vaught said. Grupo Mexico invoked a force majeur clause in contracts on July 15, declaring its inability to make deliveries because of the strike at La Caridad, which produces about 250,000 tons of copper a year. Gelman said some of the company's customers had been ``discussing'' with him plans to find alternative sources of copper in case the strike continued. Won't Have to Buy ``The consumers in Mexico were talking about buying outside'' the country, he said. ``They probably won't have to now.'' Production disruptions at a time of rising global demand for copper used in homes, automobiles and wiring compounded a global production deficit that's expected to continue into next year. Output from mines and scrap yards is forecast to fall short of demand by 661,000 metric tons this year and another 56,000 tons next year, Man Financial Inc., the largest clearing company on the New York Mercantile Exchange, forecast in June. Chile's state-owned Codelco is the world's biggest copper producer, followed by Phoenix-based Phelps Dodge Corp. quote.bloomberg.com