Mon, 22 Dec 2003


Bloomberg New York

Copper futures in New York extended a six-year high, capping a fourth straight week of gains, as a report signaled increasing demand for the metal in Europe.

Gross domestic product in Germany, the world's fourth- biggest copper user, will grow 1.8 percent in 2004 after no expansion this year, the Ifo economic institute said. Copper has risen 46 percent this year, largely on expectations of stronger demand in Europe and the U.S. and increasing purchases by China, the world's biggest consumer of the metal.

"The fundamentals remain in the market, and the Chinese continue to buy," said Anil Shah, a trader at Man Financial Inc. in New York.

Copper for March delivery rose 0.9 U.S. cent to US$1.024 a pound on the Comex division of the New York Mercantile Exchange. Prices went as high as $1.0255 a pound, the highest for a most- active contract since August 1997, and rose 3.6 percent this week.

A Dec. 12 landslide that reduced production at Freeport- McMoRan Copper & Gold Inc.'s Grasberg mine in Indonesia has heightened concern about declining copper supplies, Shah said.

Freeport on Saturday said it invoked a clause declaring its inability to fulfill supply contracts because of an unavoidable event. The New Orleans-based company said its fourth-quarter copper production will be 15 percent less than previously forecast.

Copper prices will continue rising and will reach a high of $1.25 a pound in 2005, Wayne Atwell, an analyst at Morgan Stanley & Co. in New York said.

The price gains have pushed shares of mining companies higher.

Shares of Phoenix-based Phelps Dodge Corp., the world's second-biggest copper producer, rose $1.68, or 2.3 percent, to $75.40 in New York Stock Exchange composite trading. Atwell raised his forecast for the stock, saying it will reach $100 within 12 months.

Atwell lowered his rating of Freeport shares to "underweight" from "equal weight." The stock dropped $2.25, or 5.2 percent, to $41.27.

Chile's state-run Codelco is the world's biggest copper producer.

On the London Metal Exchange, copper for delivery in three months rose $13, or 0.6 percent, to $2,238 a metric ton.