SF: Copper Advances as Strike at Biggest Mine Fuels Supply Concern
July 26 (Bloomberg) -- Copper rose in New York for a second day in three as a strike at the world's biggest mine fueled speculation supply will fall short of demand.
A strike at BHP Billiton Ltd.'s Escondida mine entered a fifth day as Chilean labor authorities prepared to mediate talks between union and company officials. The stoppage has cost about 12,000 metric tons in lost production so far, said Roberto Arriagada, a union director. Prices also gained as the dollar weakened.
The labor action "just adds to people's already- preconceived idea that there is a tightness in supply," said Jaspar Crawley, a broker at Triland Metals Ltd., one of 12 companies on the floor of the London Metal Exchange.
Copper for September delivery gained 7.25 cents, or 1.6 percent, to $4.479 a pound by 8:28 a.m. on the Comex in New York. Prices increased as much as 1.7 percent, the most in a week. Copper for three-month delivery advanced 1.9 percent to $9,840 a ton on the LME.
Full-time employees at Escondida are seeking better bonuses and benefits after copper prices more than tripled in two years through 2010. Workers at Santiago-based Codelco, the world's biggest producer, held a 24-hour strike this month.
"Ongoing attempts by labor to get more of the copper pie will likely continue to keep supply growth relatively subdued this year," Bart Melek, an analyst at TD Securities in Toronto, said in a report dated yesterday.
Escondida Production
Copper production from mines may be as much as 100,000 tons below expected levels this year, according to Melek. Escondida's output dropped 8 percent from a year earlier in the 12 months through June, BHP said last week. World usage of copper is set to exceed production by 377,000 tons this year, according to the International Copper Study Group.
The U.S. Dollar Index, a six-currency gauge of the greenback's strength, fell as much as 0.7 percent. A weaker dollar makes metals priced in the currency cheaper in terms of other monies.
Zinc for three-month delivery on the LME rose 2.1 percent to $2,522 a ton after reaching $2,526, the highest price since April 12. Orders to draw the metal from LME warehouses climbed to 107,550 tons, the highest level since April 2006. Orders climbed in Malaysia and have more than doubled this month overall.
Aluminum gained 0.8 percent to $2,640 a ton. Norsk Hydro ASA expects the primary-aluminum market excluding China to expand by about 7 percent this year, Chief Executive Officer Svein Richard Brandtzaeg told analysts in a conference webcast on the company's website today. Hydro is Europe's third-largest maker of the lightweight metal.
Nickel, lead and tin climbed in London.
--With assistance from Matthew Craze in Santiago. Editors: Dan Weeks, John Deane.
