Copper Prices Rise on Forecasts for Supply to Lag Consumption
2005-12-23 13:07 (New York)
By Simon Casey
Dec. 23 (Bloomberg) -- Copper prices rose amid forecasts
that production of the metal used to make wiring and plumbing
will lag behind demand in 2006.
Global copper production has been disrupted this year by
strikes and mine accidents, prompting analysts at Goldman Sachs
Group Inc. and UBS AG to raise their price forecasts. U.S.
mining company Constellation Copper Corp. said yesterday its
Lisbon Valley project in Utah may start full production in April
instead of January because of a labor shortage.
``Supply has been growing at a very lackluster pace,'' said
Stefan Weiser, head of commodity sales at Goldman Sachs in
Singapore, in a television interview today. ``We have real
supply constraints.''
Copper for delivery in three months on the London Metal
Exchange rose $24.50, or 0.6 percent, to $4,454.50 a metric ton
($2.02 a pound). The metal, little changed this week, has surged
46 percent in the past year and traded at a record $4,475 on
Dec. 9.
Copper for March delivery on the Comex division of the New
York Mercantile Exchange, or Nymex, rose 1.4 cents, or 0.7
percent, to $2.0395 a pound. Prices rose 0.5 percent this week.
Output has been lost in India in 2005 after a Nov. 21
explosion closed a smelter operated by Hindalco Industries Ltd.
A strike at Asarco LLC, the second-largest U.S. copper producer,
and a fuel shortage in Zambia also disrupted smelter output.
The copper market deficit next year will be 100,000 tons,
UBS AG said earlier this month. Goldman Sachs analyst James
Gutman said in a Dec. 15 report there will be a 5,000-ton
shortfall. Gutman raised his 2006 average three-month copper
price forecast by almost $2,000 to $4,750 a ton.
Stockpile Increase
Inventory is needed by copper consumers to fill the
production shortfall. Spare metal monitored by commodity
exchanges in London, New York and Shanghai was 158,537 tons,
according to data compiled by Bloomberg. That's equal to about
three days' global usage.
Stockpiles tracked by the LME rose 725 tons to 81,625 tons,
the exchange said today in a daily report. Metal monitored by
the Shanghai Futures Exchange declined 1,731 metric tons, or 2.4
percent, to a seven-week low of 69,853 metric tons, the exchange
said in a weekly report on its Web site today.
Zinc, Aluminum, Nickel
Zinc dropped $14, or 0.7 percent, to $1,881 a ton. The dark
gray metal used to protect steel from corrosion traded at $1,898
yesterday, a 16-year high.
The production shortfall next year will be 330,000 tons,
Goldman Sachs said in a Dec. 15 report.
Shenzhen Zhongjin Lingnan Nonfemet Co., China's third-
biggest zinc producer, shut its zinc and lead smelter in
southern China after a Dec. 21 toxic spill in a nearby river.
Sales next year will be reduced because of the accident, the
company said today in a statement to the Shenzhen Stock
Exchange.
Aluminum rose $30.50, or 1.4 percent, to $2,276 a ton.
Aluminum inventory tracked by the LME rose 10,350 tons to
647,675 tons.
Nickel rose $180 to $13,575, lead added $2 to $1,110 and
tin declined $25 to $6,550.
The LME, the world's largest metals exchange, will be
closed for public holidays on Dec. 26 and 27. Nymex is closed on
Dec. 26.
--With reporting by Paul Gordon in Hong Kong and Claudia
Carpenter in New York. Editor: Tilles (dje, sds)
Story illustration: To chart London Metal Exchange three-month
copper prices, click on {LMCADS03 <Cmdty> GP <GO>}. For Comex
copper futures, see {HG! <Cmdty> GP <GO>}. For more metal
market news, see {NI METMARKET BN <GO>}.
To contact the reporters on this story:
Simon Casey in London at (44) (20) 7673 2631 or
scasey4@bloomberg.net |
