Copper Rises as Traders Speculate Last Week's Decline Overdone
2005-07-04 07:12 (New York)
By Chanyaporn Chanjaroen
July 4 (Bloomberg) -- Copper futures rose from a one-month
low in London as some traders judged last week's 4.8 percent
decline was excessive given the shortage of the metal on
international markets.
Copper for delivery in three months on the London Metal
Exchange, or LME, dropped to $3,206 a metric ton at the end of
last week, the lowest closing price since June 2. Last week's drop
was the biggest since the week ending May 13. LME-monitored copper
stockpiles stayed close to their lowest in 31 years.
The gains ``are mostly technical,'' Robin Bhar, a London-
based analyst at Standard Bank London, said today by phone.
``People are wondering whether there will be more metal coming''
to warehouses monitored by the exchange.
Copper for delivery in three months on the LME rose $24, or
0.7 percent, to $3,230 a ton at 11:47 a.m. in London. The price is
6 percent below the record $3,435 reached on June 20.
LME-monitored copper stockpiles rose 750 metric tons, or 2.6
percent, to 29,625 tons, the exchange said today, still close to
the lowest since July 1974. Stockpiles fell 88 percent last year,
drained by demand from China, the world's largest consumer of the
metal.
There has been speculation ``for quite some time'' that as
much as 40,000 tons of copper may be delivered to warehouses
monitored by the LME in Singapore, Alan Williamson, an analyst at
HSBC Securities Inc. in London, said in a July 1 report.
Asarco Inc. workers at the company's Mission and Silver Bell
mines voted to join a strike over pay, Arizona Daily Star
reported, citing Terry Bonds, an official with the United
Steelworkers of America labor union. Asarco is the largest copper
producer in the U.S.
Asarco Strike
The 200 mine workers were due to strike from 12:01 a.m. local
time today, the newspaper said. More than 1,200 Asarco workers are
striking, the paper said. A further 300 refinery workers in
Amarillo, Texas will vote today whether to join them.
``A strike that lasts two to three weeks would boost
prices,'' Bhar said. Asarco plans to produce 212,000 tons of
copper this year, 37 percent higher than last year, the company's
president Daniel Pellechea said June 20. This year's production is
equal to about 1 percent of world demand.
Hedge-fund managers and other large speculators increased
their short positions, or bets prices will fall, to 21,136
contracts on the Comex division of the New York Mercantile
Exchange in the week ended June 28, according to U.S. Commodity
Futures Trading Commission data. The short positions are the
highest since May 2003.
Net long positions fell by 2,072 contracts to 20,711
contracts, the Washington-based commission said.
The gross short positions on Comex copper leaves
``significant room'' for a rally in copper prices if funds have to
cover their short positions, Ingrid Sternby, an analyst at
Barclays Capital in London, said today in a report.
Among other metals for delivery in three months on the LME,
aluminum rose $5, or 0.3 percent, to $1,693 a ton. Nickel dropped
$215, or 1.5 percent, to $14,275 and lead fell $10, or 1.2
percent, to $855. Tin was down $30, or 0.4 percent, at $7,150 and
zinc lost $3, or 0.3 percent, to $1,195.
--Editor: Carrigan, Wallace |
