$6.00/lb Copper in 2007 ???
Copper Rises in London on Speculation Decline Was Exaggerated
By Chanyaporn Chanjaroen
Nov. 2 (Bloomberg) -- Copper rose on speculation its 3.1 percent drop yesterday, the biggest decline in four weeks, was exaggerated given the outlook for production and demand.
Credit Suisse Group, which correctly forecasts in 2005 that prices would rise to $8,000 a metric ton, said today copper may ``spike' to a record $12,000 next year. UBS AG said Oct. 31 that production won't overtake demand, even after mining companies increased output.
``One of the themes that has dogged the industry for four years is supply disruptions,' London-based Credit Suisse analyst Jeremy Gray said in a report. ``Copper has the potential to spike to $12,000 a ton in 2007 as supply remains constrained.'
Copper for delivery in three months on the LME rose $92, or 1.3 percent, to $7,242 a ton as of 11:33 a.m. local time. It climbed to record $8,800 a ton May 11.
Labor disputes and other disruptions at mines may curb copper supply in 2007, Credit Suisse said. Strikes, a rockfall and lower-than-expected mine recoveries have lost 476,000 tons of production so far in 2006. Supplies will lag behind demand by 252,000 tons next year, the bank said.
Still, stockpiles of the metal used to make wiring are increasing. Inventory tracked by the LME rose 3.2 percent to 139,475 tons, the highest since May 2004, the exchange said today in a daily report.
Most of the copper delivered into LME-registered warehouses was in South Korea, the nearest registered location to China, the world's largest consumer of the metal.
``People are wary of the increases,' said Martin Squires, an analyst at JPMorgan Chase & Co. in London, in an interview.
Among other LME-traded metals, aluminum gained $20 to $2,754 a ton and nickel rose $350 to $31,300. Lead slipped $5 to $1,660, tin lost $300 to $9,800 and zinc dropped $10 to $4,200.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net .
