Disruption to production good for AurCopper Rises in London for 3rd Day on Disruption to Production
April 25 (Bloomberg) -- Copper rose for a third day in London as supply disruptions at mines in Latin America and Asia gathered pace, threatening to deepen a shortage of the metal.
Workers at a Falconbridge Ltd. copper mine in Chile will probably strike unless the company sweetens a wage offer, a union leader said yesterday. This adds to an ongoing strike at Grupo Mexico SA's La Caridad mine in Mexico and declining output at Freeport-McMoRan Copper & Gold Inc.'s Grasberg mine in Indonesia.
``The development at Falconbridge should lead to a further increase in copper prices'' as supply is affected, Gu Yuan, a trader at Shenzhen Star Futures Co., said by phone from Shanghai.
Copper for delivery in three months rose $71, or 1.1 percent, to $6,868 a metric ton as of 9:53 a.m. The metal, which is used in wires and plumbing, gained 56 percent this year. It traded at a record $6,930 yesterday.
Copper futures in Shanghai closed at a record 63,850 yuan ($7,969) a ton. Chinese prices include 17 percent tax and a 2 percent duty.
The supply concerns come as fund managers are pouring money into commodities such as copper, zinc and silver, seeking better returns than those from stocks and bonds, as the global economy expands. The world economy is in ``strong'' shape, the Group of Seven said April 22. China's economy, the biggest consumer of most metals, grew 10.2 percent in the first quarter.
Workers at Falconbridge's Lomas Bayas, which produced 63,000 tons of copper last year, want a raise of 5.5 percent, said Hector Magna, treasurer at a union representing about 300 workers at the mine in northern Chile. Toronto-based Falconbridge offered 1.5 percent above inflation.
Suspension of Deliveries
``The company is in conditions to give it to us,'' Magna said in an interview. ``It's not out of this world.''
Grupo Mexico SA, the world's seventh-biggest copper producer, said April 12 it may suspend deliveries next month due to a strike at La Caridad which began on March 24. The company produces about 640,000 tons of copper a year.
Freeport-McMoRan said April 18 that variations in the richness of metal deposits in different parts of its Grasberg mine in Papua led to decline of a third in first-quarter production from the site.
Chile, the world's biggest copper producer, increased its forecast for average prices for the metal this year to as much as $2.64 a pound as rising demand in China depletes supplies.
Zinc Mine Restart
The Chilean Copper Commission, a state-run research group, expects prices to surpass its January estimate of as much as $1.76 a pound ($3,880 a ton) this year, it said yesterday. Prices would average as much as $2.44 a pound in 2007, the group said