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

To: Stephen O who wrote (1458)	6/23/2006 1:39:57 PM
From: Stephen O	Respond to of 2131

Copper May Advance Next Week on Supply Constraints 2006-06-23 11:54 (New York) By Katy Watson and Simon Casey June 23 (Bloomberg) -- Copper may rise next week on speculation supplies will be limited by labor disputes and declining stockpiles. Seven of 11 analysts, investors, traders and consumers surveyed yesterday by Bloomberg News said the metal will rise. Three said it will decline and one forecast little change. Copper stockpiles tracked by the London Metal Exchange have dropped to the lowest in 24 weeks. Labor negotiations between miners and copper producers such as BHP Billiton may disrupt as much as 18 of global supply, according to UBS AG. ``If you look at the fundamentals of the industry, it's very, very strong,'' said David Spika, vice president and investment strategist at Westwood Holdings Group in Dallas. ``There's still strong demand, limited new supply.'' Copper soared to a record last month as a miners strike reduced output at Group Mexico SA, the nation's largest producer of the metal. Demand for copper, which is used to make power cables and plumbing, will exceed supply from mines by 184,000 metric tons in 2006, Credit Suisse Group said in a report last week. Inventory tracked by the LME and commodity exchanges in New York and Shanghai is 169,095 tons, according to data compiled by Bloomberg, equal to less than four days' global use. Copper for delivery in three months on the London Metal Exchange rose $21, or 0.3 percent, to $6,730 a metric ton as of 4:52 p.m. local time. It traded at a record $8,800 May 11. Miners' Demands Copper for September delivery on the Comex division of the New York Mercantile Exchange fell 0.9 cent to $3.0575 a pound. The metal for September delivery on the Shanghai Futures Exchange closed 3.3 percent lower at 58,610 yuan ($7,326) a ton. Chinese prices include 17 percent tax and a 2 percent duty. BHP Billiton is due to meet workers from Chile's Escondida, the world's largest copper mine, to negotiate a new labor agreement, union official Pedro Marin said June 19. Escondida accounts for 7 percent of world copper supply, according to UBS. Miners in South America and Africa are demanding pay increases to reflect copper prices, which have more than quadrupled in the past three years. Other mines facing labor contract renewals this year include Teck Cominco Ltd.'s Highland Valley mine in Canada and four mines run by Chile's Codelco, UBS analysts said in a June 16 note. Grupo Mexico said last week it will close the La Caridad mine after the company was unable to resolve a strike that began March 24. Interest Rate Concern The market is focusing ``on a whole host of supply threats, which come against a backdrop of falling LME stocks,'' said Andrew Cole, an analyst at Metal Bulletin Research in London. ``It just takes one of these producers to close down for a while'' to ``really make a difference.'' Copper has dropped 22 percent since rising to a record last month amid concern that the U.S. Federal Reserve will raise interest rates at a meeting on June 28-29 as it tries to curb inflation. It would be the 17th consecutive increase by the Fed. Investors have reduced their holdings on concern higher borrowing costs will curb growth in copper consumption. Concern in the copper market about inflation and higher rates is ``still there,'' said Robin Bhar, an analyst at UBS in London. Copper for three-month delivery may still drop to $5,000 a ton, according to UBS. --With reporting by Suzy Assaad in New York and Tan Hwee Ann in Melbourne. Editor: Carrigan.