this may also be contributing.............got it off the commodities thread.
April 21, 2008
THE copper price is expected to gain even more ground this week as strikes by workers in Chile create further pressure on global supplies.
The spot market price for copper continues to hover around $US4 a pound after breaking through to record highs last week when workers at Codelco's El Teniente mine in Chile walked out in protest over pay and benefits.
State-owned Codelco has also shut its Andina and Salvador mines because of the strike. Together, the three mines yield more than 735,000 tonnes of copper annually in a mix of copper cathodes and refined copper ingots.
Output in Chile, which produces about 40 per cent of the world's copper, is already being dogged by shortages in power supplies because of a nationwide drought that has dramatically lowered levels in the dams usedto power hydro-electric generators.
At El Teniente, the world's biggest underground copper mine, hostile striking workers have barricaded the entrance. The protest action began on Saturday, Australian time.
Chilean Mining Minister Santiago Gonzalez told Bloomberg that the copper price might climb higher because of the strikes.
It follows industrial action by Codelco contractors last year, a period in which Codelco reported an annual profit of $US8.45 billion, which was the second-biggest in the company's history.
Last year's strike lasted six weeks and cost the company $US100 million and 30,000 million tonnes in lost output.
Mr Gonzalez said contractors were again to blame for the new round of action, not the company's 17,000-strong workforce. The contractors are believed to want productivity bonuses.
Codelco said protesters and striking workers had isolated the city of Salvador and had retreated from an occupied position inside the Andina mine.
Copper has jumped 28 per cent this year, but fell 2.6 per cent last week as the US dollar strengthened against a range of currencies, which caused a sell-off in base metals.
However, the high oil price is expected to keep upward pressure on copper this week after Saudi Arabia said it had no plans to increase oil production capacity after 2009.
Forecast tight global supply in the years ahead has pushed crude prices to record highs above $US117 a barrel.
Analysts at Goldman Sachs in the US believe the spot copper price could close the year at $US4.10 a pound, or $US9000 a tonne, before rising to $US10,000 a tonne in 2009.
CRU head of copper research Allan Trench tipped an average copper price of between $US4180 and $US4400 a tonne over the next 10 years.
Market watchers also predict that copper demand will continue to grow at an annual pace of 3.7 per cent until 2018 at least, meaning total world consumption will be 27 million tonnes.
While the slowing US economy has dampened demand for the red metal from the US housing market, there appears to be no slowing in demand in China, which recently overtook the US as the biggest consumer in the world.
Higher capital costs have also made it difficult to bring new mines into production while analysts have also noted the lower grades which have been associated with many new discoveries.
PNA Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
