Copper Heads for Fourth Weekly Gain in Five as Supplies Drop
2006-09-22 08:52 (New York)
By Chanyaporn Chanjaroen
Sept. 22 (Bloomberg) -- Copper headed for a fourth weekly gain
in five on speculation that supplies will lag behind demand because
of mine disruptions and dwindling stockpiles.
Inventories monitored by the London Metal Exchange fell 1.7
percent today to 121,275 metric tons. That's equivalent to less
than three days of global use. Stockpiles have dropped 3.3 percent
this month.
``All types of copper stocks will be at critically low levels,
and the market from mine to consumer will remain tight,'' Simon
Toyne, a London-based metals analyst at Numis Securities, said
today in a report.
Copper for delivery in three months advanced $85, or 1.1
percent, to $7,645 at 1:50 p.m. on the LME. Prices have gained 5.2
percent this week. The metal has doubled in the past year, reaching
a record $8,800 a ton on May 11.
Copper futures for December delivery rose 3.85 cents, or 1.1
percent, to $3.47 a pound on the Comex Division of the New York
Mercantile Exchange. A futures contract is an obligation to buy or
sell a commodity at a fixed price for a specific delivery date.
Six of 13 analysts, investors and traders surveyed by
Bloomberg yesterday forecast copper will rise next week. Four
expected a drop and three predicted little change.
Demand will exceed supply by 52,000 tons in 2006, compared
with a shortfall of 360,000 tons last year, Goldman Sachs Group
Inc. analysts led by London-based James Gutman said in a Sept. 18
report. The bank raised its average price forecast in 2006 by 18
percent to $6,617 a ton.
Chile, Indonesia
A strike last month at BHP Billiton Ltd.'s Escondida site in
Chile reduced production. Grupo Mexico SA also lost output this
year due to a labor dispute. Freeport-McMoRan Copper & Gold Inc.
has reported declining output at Grasberg in Indonesia because of
ore containing less metal. Escondida is the world's biggest copper
mine, followed by Grasberg.
Canadian nickel miner Inco Ltd. has suspended delivery of
copper concentrates from its Voisey's Bay mine in Labrador, Canada,
to three customers in Europe, Platts reported yesterday, citing
Inco spokesman Steve Mitchell.
Copper in London has traded in a range of $7,035 to $8,080 a
ton since July.
``There's a lack of consensus'' on whether there will be
oversupply or a shortfall next year, said Andrew Silver, a London-
based trader at Natexis Commodity Markets Ltd.
When prices of copper fall by $200 to $300 a ton, consumers
buy the metal, minimizing losses, Silver said. Producers start
selling when prices rise, capping gains.
Zinc stockpiles monitored by the LME plunged 6,150 metric
tons, or 4.1 percent, to 144,075 tons. That's the largest one-day
decline since Jan. 28, 1991.
Zinc in London gained $47, or 1.4 percent, to $3,492 a ton.
Prices have more than doubled in the past year, trading at record
$4,000 a ton May 11.
Supplies of zinc, used to galvanize steel, will fall short of
demand by 400,000 tons this year, buoying prices, CHR Metals Ltd.
said Sept. 14.
--With reporting by Jae Hur in Singapore and Rishaad Salamat in
London. Editor: Carrigan. |
