Copper Prices Rise to Nine-Year High as Demand Outpaces Supply
Oct. 6 (Bloomberg) -- Copper prices rose to a nine-year high in New York amid signs that mining companies are failing to keep up with global demand for the metal, forcing makers of wires and pipes to dig deeper into shrinking inventory.
Stockpiles monitored by the London Metal Exchange have plunged 78 percent this year. Some workers at Chile's Codelco, the world's biggest producer, may strike later this week, reducing output. Prices have climbed 70 percent in the past year, led by demand gains in China and the U.S., the world's largest buyers of the metal used in cars, homes and appliances.
``If more material doesn't start to be available, prices are going to be forced even higher,'' said Ingrid Sternby, an analyst at Barclays Capital in London.
Copper futures for December delivery rose 2.15 cents, or 1.5 percent, to $1.423 a pound on the Comex division of the New York Mercantile Exchange after reaching $1.428, the highest since August 1995.
A strike called for today at Santiago-based Codelco, owned by the government, was postponed until Oct. 8 at the company's request, said Mario Sepulveda, a union treasurer. About 760 supervisors at the company's northern division on Sept. 29 authorized a strike, demanding improved housing, health and education benefits.
Shares of Phelps Dodge Corp., the world's second-biggest copper producer, climbed $4.34, or 4.7 percent, to $96.36 at 2:15 p.m. in New York Stock Exchange composite trading after reaching a record $96.69. The stock has climbed 86 percent in the past year.
Reduced Inventory
Warehouses approved by the London Metal Exchange, the world's largest metals market, held 95,350 metric tons. Inventory reached a 14-year low of 80,175 tons on Aug. 17.
The rally in copper may continue, some analysts said.
``Countries may now be competing for available copper stocks, to protect national interests,'' said John Meyer, an analyst at Numis Corp. in London.
The premium for copper for immediate delivery over metal for delivery in three months has almost doubled in the past two weeks on the London Metal Exchange, indicating less supply is available, Sternby said. The spread is $152 a metric ton, the widest since April 21.
World demand for copper may exceed output from mines and scrap yards by 950,000 tons, London-based Bloomsbury Minerals Economics Ltd. said in a report yesterday.
Chinese demand for metals is soaring as the country builds homes, schools and other essentials for millions of rural residents who are flocking to cities in search of work. About 20 million Chinese annually will migrate from rural China to cities over the next 10 years, Morgan Stanley has estimated.
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