copper rebounds in n.y.

Copper Rebounds in N.Y. as Dollar Slumps, Making Metals Cheaper

By Millie Munshi

July 30 (Bloomberg) -- Copper rose more than 1 percent in New York on speculation that a weaker dollar will encourage buyers holding other currencies to purchase the metal.

The dollar dropped the most in more than two weeks against the euro. A change in exchange rates makes copper, traded in dollars, more or less expensive for buyers using other currencies. The metal has gained 25 percent this year, while the dollar is down 3.7 percent against the euro.

``The dollar has been lower today, and that has sparked some buying,'' said Michael Gross, a futures analyst at Liberty Trading Group in St. Petersburg, Florida.

Copper futures for September delivery gained 4.15 cents, or 1.2 percent, to $3.5885 a pound on the Comex division of the New York Mercantile Exchange, the largest gain since July 20.

Falling copper inventories also supported the price, traders said. Stockpiles in warehouses monitored by the London Metal Exchange fell 1,000 metric tons, or 1 percent, to 101,800 tons. They have dropped 44 percent this year.

The global market is ``extremely tight'' amid low stockpiles, said Jose Chirinos, chief financial officer at Southern Copper Corp., the world's fifth-largest producer of the metal. Supplies aren't rising as quickly as expected, he said on a conference call.

Earlier, the metal dropped as much as 1.3 percent after supply concerns in Chile faded.

Chile's state-owned Codelco, the world's biggest producer of the metal, said it would resume production today at its second-largest mine. Unions at El Teniente in central Chile will resume work, Codelco said today. Mining had been halted since July 26 because of protests by striking contract workers.

`Seen as Bearish'

``Production isn't being cut now because of the labor disputes, and that is being seen as bearish,'' said Eric Wittenauer, an industrial-metals analyst at A.G. Edwards & Sons Inc. in St. Louis. Supplies are still ``tight,'' he said.

Global copper consumption topped supplies by 265,000 metric tons in the four months ended April, the International Copper Study Group said on July 18.

``With production lagging behind demand, the backdrop of labor unrest in major producing countries creates some unease,'' Wittenauer said.

Contract workers at Codelco have been on strike since June 25 to press for higher wages. The protests had cut production at three of the company's mines, including El Teniente. Work has been halted almost every day since July 16 at the El Salvador mine, the company's smallest.

On the London Metal Exchange, copper for delivery in three months gained $85, or 1.1 percent, to $7,835 a ton. The metal has gained 2.2 percent from a year ago.

To contact the reporter on the story: Millie Munshi in New York at [email protected] .

Last Updated: July 30, 2007 14:32 EDT