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Gold/Mining/Energy : Copper - analysis -- Ignore unavailable to you. Want to Upgrade?

To: Stephen O who wrote (1444)	5/23/2006 3:20:59 PM
From: Stephen O	Read Replies (1) \| Respond to of 2131

Copper Posts Biggest Increase Ever as Demand May Outpace Supply 2006-05-23 14:23 (New York) By Katy Watson May 23 (Bloomberg) -- Copper surged 12 percent in London, the biggest one-day jump ever, on speculation that a price rally isn't yet over and that demand will exceed production. Demand for the metal used to make power cables will grow this year in China and the U.S., the world's two largest consumers, some analysts have said. Last year prices gained 40 percent as a deficit led consumers to use stockpiled copper. ``The underlying fundamentals of supply and demand around the world remain the same,'' Charles ``Chip'' Goodyear, chief executive officer of BHP Billiton, the world's largest mining company, said in a teleconference. ``We are seeing very good economic conditions around the world, the supply side is still struggling to keep up.'' Copper for delivery in three months on the London Metal Exchange jumped $880, or 12 percent, to $8,460 a metric ton. During the session it fell as much as 2.3 percent to $7,405. Copper has gained 92 percent this year. Copper for delivery in July rose 42.4 cents, or 12 percent, to $3.8855 a pound on the Comex division of the New York Mercantile Exchange, the biggest percentage gain since at least 1988, according to Bloomberg data. The metal reached a record $4.04 on May 11. Trading Halts Trading stopped at 9:45 a.m. local time after prices rose what was then a 20-cent limit, Nymex spokeswoman Anu Ahluwalia said. It resumed at 10:01 a.m. with a new limit of 40 cents. When prices climbed the new limit, trading stopped again at 12:05 p.m. The limit was raised to 60 cents and trading started again at 12:21 p.m., she said. Copper declined last week as speculative investors cut their holdings on concern global interest rates will increase, curbing demand for commodities. Copper dropped as much as 9 percent on May 15, its biggest one-day decline since October 2004. Price volatility will continue because of buying and selling from speculators, said Peter Hollands, managing director of U.K. consulting company Bloomsbury Minerals Economics Ltd. ``Conditions like this will probably prevail for another year,'' Hollands said. ``You are going to get volatility when you have a huge amount of money trying to chase after what is, in world sense, a relatively limited market,'' Goodyear said. Demand In 2005 copper use beat output by 100,000 tons, analysts at UBS AG said in a report last month. This year there will be a shortfall of 200,000 tons, UBS said. Copper inventory monitored by the LME dropped 175 tons, or 0.2 percent, to 107,150 tons, the exchange said today in a daily report. Stockpiles have risen 20 percent this year and are currently equal to less than three days of global consumption. Other metals rose on the LME. Aluminum gained $110, or 4 percent, to $2,870 a ton on the LME. Lead increased $34 to $1,169, zinc rose $220 to $3,550, tin gained $450 to $8,550 and nickel was $1,295 higher at $22,195, the highest price since at least 1987. --With reporting by Chanyaporn Chanjaroen in London, Paul Waide in Melbourne and Choy Leng Yeong in Seattle. Editor: Casey (dje).