Copper Rises to Six-Week High on Falling Inventories, Dollar
By Choy Leng Yeong
July 2 (Bloomberg) -- Copper rose in New York to the highest in more than six weeks on speculation a decline in the value of the dollar will boost demand for the metal used in wiring and plumbing as inventories dwindle.
Copper stockpiles monitored by the London Metal Exchange fell 1.8 percent to an eight-month low of 112,600 metric tons, the exchange said today. Copper, sold in dollars, has risen 23 percent this year as inventories slumped 38 percent and the U.S. currency fell 2.7 percent against a basket of six major world currencies. The dollar today touched a 26-year low against the British pound and approached the weakest against the euro.
``The lower the dollar is, the cheaper the commodity is for foreign buyers,'' said Michael Smith, president of T&K Futures & Options in Port St. Lucie, Florida. The inventory drop ``is a big deal. That means there's a lot of buyers out there.''
Copper futures for September delivery rose 7.65 cents, or 2.2 percent, to $3.527 a pound on the Comex division of the New York Mercantile Exchange, the highest closing price for a most- active contract since May 15.
A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.
Inventories also dropped in China, the biggest consumer of the metal. China's stockpiles fell 5.6 percent to 90,617 tons, the biggest decline in six months, according to a weekly report by the Shanghai Futures Exchange on June 29.
Insatiable Demand
``China's demand is insatiable,'' William Hayden, president of Ivanhoe Philippines Inc., a unit of Ivanhoe Mines Ltd., said in an interview today in Manila. ``I can't see any let up in demand, not in China, India, Pakistan and other areas, certainly not for base metals like copper and nickel in the next 10 years.''
Copper rose 2 percent last week amid strikes and labor disputes in Chile and Peru. Contract workers at Chile's state- owned Codelco, the world's biggest copper producer, threatened to increase protests that have cut the company's output.
Contract workers, who went on strike June 25, last week temporarily blocked roadways to mines, burned buses and stormed a processing plant in northern Chile to press for higher wages. Protests will worsen unless Codelco negotiates, Cristian Cuevas, president of the Confederation of Copper Workers, said today.
Workers at Southern Copper Corp., the world's fifth-largest producer of the metal, on June 28 suspended a five-day strike in Peru to continue labor talks.
A union at Collahuasi, Chile's third-largest copper mine, said last week it will strike on July 9 to press for higher salaries from mine owners Xstrata Plc and Anglo American Plc.
``The copper strikes and threats of strikes should continue to support the market,'' Mike Rapson, a broker at Man Financial Ltd. in Toronto, said in a note today.
MRX Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
