Copper May Advance Next Week on Chinese Purchases 2007-01-05 08:03 (New York)
By Chanyaporn Chanjaroen
Jan. 5 (Bloomberg) -- Copper may rise next week, paring its
worst start to a year in more than two decades, as Chinese wire
and pipe manufacturers increase purchases to take advantage of
the price slump.
Nine of 17 analysts, investors and traders surveyed by
Bloomberg News yesterday and Jan. 3 forecast copper will rise
next week. Eight expect prices to decline.
Chinese manufacturers have been curbing orders until prices
retreat, said Marc Kaplan, president of Mews Metals Trading LLC
in Verona, New Jersey. Demand from the world's biggest copper
consumer may expand as much as 5 percent this year, Shen Haihua,
vice president at Maike Futures Co. in Shanghai, said last week.
``Chinese demand is greatly understated,'' said Stephen
Briggs, a London-based analyst at Societe Generale, one of 11
companies that trade on the floor of the London Metal Exchange.
Copper for delivery in three months on the LME climbed $47,
or 0.8 percent, to $5,762 a metric ton as of 12:41 p.m. local
time. It has fallen 8.3 percent this week, trading at a nine-
month low of $5,625 yesterday.
On the Comex division of the New York Mercantile Exchange,
copper for March delivery advanced 1.1 percent to $2.629 a pound
in after-hours electronic trading. Copper for delivery in March
on the Shanghai Futures Exchange fell the daily limit of 4
percent to settle at 54,630 yuan ($6,995) a ton. Chinese prices
include 17 percent tax and 2 percent duty.
China Purchases
China may purchase more copper this month and the next as
wiremakers stock up to ensure output isn't disrupted during the
weeklong Lunar New Year holiday, Beijing Antaike Information
Development Co. said in a monthly report.
China's copper demand has recovered as prices fell, Antaike
said in the report e-mailed today. It produced 4.54 million tons
of semi-processed copper products in the first 11 months of 2006,
7 percent more than a year earlier, Antaike said, citing figures
from the China Nonferrous Metals Industry Association.
Prices have fallen about 33 percent in London since trading
at a record $8,800 a ton on May 11 as supplies increase.
Stockpiles monitored by commodity exchanges in New York, London
and Shanghai rose to 256,758 tons, the highest since June 2004,
according to data compiled by Bloomberg.
Surplus Concern
The increase ``is leading to concern in the market that
copper has moved into a surplus,'' Briggs said.
Briggs expects supply to match demand this year, after a
deficit of 200,000 tons in 2006.
Supply probably will beat usage by 230,000 tons this year,
Goldman Sachs Group Inc. analysts led by James Gutman in London
said in a Dec. 11 report.
Production last year was curbed by unforeseen disruption to
mines including Escondida in Chile, the world's largest source of
copper. Threats to supply remain.
Dona Ines de Collahuasi, Chile's fourth-largest copper mine,
said yesterday equipment repairs this month will reduce
production by about 30,000 tons. The loss is equal to 7 percent
of its 2005 output of 427,000 tons.
Typhoon Damage
Australia's Lafayette Mining Ltd., which is developing a $60
million mine in the Philippines, delayed its first exports of
copper until April after repairs to typhoon damage took longer
than expected. Equipment and a pier at the company's Rapu Rapu
mine, located 350 kilometers (219 miles) southwest of Manila,
were damaged by a so-called supertyphoon on Nov. 30. Lafayette
will borrow $10 million to pay for repairs.
The company will resume mining on Feb. 4 with shipments
beginning about two months later, Bayani Agabin, a spokesman for
Lafayette's Philippine unit, said today.
BHP Billiton Ltd., the world's largest mining company, is
negotiating with a union at its Cerro Colorado mine in Chile to
avert a strike after the existing labor contract expires Jan. 30.
The mine is expected to produce about 120,000 tons this year.
--With reporting by Millie Munshi and Halia Pavliva in New York,
Heather Walsh in Santiago, Claire Leow in Jakarta, Luzi Ann
Javier in Manila, Brett Foley in London and Chia-Peck Wong in
Singapore. Editor: Casey (jwc/kkl). |
