Copper Rises in London as Chinese Seen Replenishing Stockpiles
By Chanyaporn Chanjaroen and Katy Watson
Sept. 4 (Bloomberg) -- Copper rose in London on speculation that producers of wires and pipes in China, the world's largest consumer of the metal, resumed purchases to replenish falling stockpiles.
Record global prices for copper this year prompted Chinese users to turn to domestic stockpiles. Inventory monitored by the Shanghai Futures Exchange dropped to 48,193 tons Aug. 31, down 17 percent this year. That's a 40 percent decline from a 19- month high of 75,264 tons reached on Dec. 1.
``The Chinese have been out of the market for the past six months; now they are returning,'' said Jim Lennon, a London- based analyst at Macquarie Bank Ltd. who ranked third in a survey of commodities specialists by Australia's BRW business magazine in October 2005.
Copper for three-month delivery gained $75, or 1 percent, to $7,665 a metric ton at 3:44 p.m. on the London Metal Exchange.
Chinese buyers reduced copper imports this year after the metal soared to a record $8,800 a ton on May 11. Prices have fallen 13 percent since then. The nation imported 477,220 tons of copper from January through July, 42 percent less than a year earlier, according to data released by the China Customs General Administration on Aug. 25.
A shortage of copper in China has helped boost prices, said Ulrich Steiner, an analyst at Zurich-based Bank Leu AG. ``In China, inventories are very low.''
LME-monitored stockpiles increased 2,700 tons, or 2.2 percent, to 128,100 tons, the exchange said today. That's still less than three days of global consumption.
Escondida Mine
Workers at BHP Billiton's Escondida mine in Chile, the world's largest copper deposit, returned to work Sept. 2, ending a strike that halved production. Processing plants at the mine began working at full capacity yesterday and extraction of ore also is at levels prior to the strike, Pedro Marin, a spokesman for Escondida Workers' Union No. 1 in the city of Antofagasta, said by telephone.
The strike, which began Aug. 7, resulted in about 45,000 metric tons in lost production at a cost of more than $200 million, according to BHP Billiton.
Chile, the world's biggest copper producer, may face further labor disputes.
State-owned Codelco, the world's biggest copper producer, has wage negotiations coming up at its Chuiquicamata mine, while Highland Valley, owned by Teck Cominco Ltd., is also due to start wage talks, Michael Davies, an analyst with commodities broker with Sucden (UK) Ltd., said in an e-mailed report. BHP's Cerro Colorado mine and Falconbridge Ltd.'s Collahuasi mine are also scheduled to hold pay talks through next June.
Wage Talks
Copper net short positions, or bets prices will fall, rose to the highest since September 2003 on the Comex division of the New York Mercantile Exchange. Speculative short positions of Comex copper futures held by hedge-fund managers and other large speculators outnumbered long positions by 11,180 contracts, a 15 percent gain, the Washington-based U.S. Commodity Futures Trading Commission said Sept. 1. Comex is closed today for the U.S. Labor Day national holiday.
Other LME-traded metals gained. Aluminum added $2 to $2,494 and zinc increased $55, or 1.6 percent, to $3,485 a ton. Lead was $35 higher at $1,265 and tin advanced $75 at $9,050 a ton. Nickel dropped $1,050, or 3.7 percent, to $27,550 a ton after earlier rising to as much as $28,900.
``The price of nickel has consolidated; it has reached the maximum possible in the short term,'' said Steiner. ``Demand remains strong and supply remains short.''
