Copper Rises on Concern Output at World's Largest Mine May Drop
July 14 (Bloomberg) -- Copper rose in London, heading for a third straight weekly gain, amid concern that a pay dispute at the world's largest mine may lead to reduced production.
Miners at Escondida in Chile plan to strike next month if unions and management fail to reach a wage accord. Workers introduced ``go-slow'' tactics at the mine on July 7. Escondida accounted for 8.5 percent of global mine output last year, according to data from Chile and mine owner BHP Billiton.
``Copper's strong and likely to remain strong ahead of the Escondida contract,'' said William Adams, a Saffron Walden, England-based analyst at metals information company Basemetals.com.
Copper for delivery in three months on the London Metal Exchange rose $180, or 2.3 percent, to $8,100 a metric ton as of 10:20 a.m. local time. It has gained 4.6 percent this week.
Copper output has already been cut this year by strikes at mines in Mexico and faltering metal recoveries at mines in Zambia and Indonesia. Stockpiled copper, which consumers may use to fill a forecast production shortfall this year, has also slumped in the last month.
Inventory monitored by the LME gained 0.6 percent, the exchange said today, to 94,100 tons. Still, it has fallen 16 percent since June 1 and is now equal to about two days of global consumption.
``Any strike action would soon eat into the stock level,'' Adams said.
Among other LME metals, aluminum gained $30 to $2,635, lead rose $40 to $1,170, tin was $175 higher at $8,095 and zinc gained $110 to $3,530.
Nickel climbed $650 to $25,900 after inventories of the metal used to make stainless steel dropped the most since August 2004. Inventory monitored by the LME fell 14 percent, the exchange said today. Stockpiles have dropped 82 percent this year to 6,582 tons, the lowest level since May 18, 2005.
``Until we see any sustained turnaround in inventories, it's difficult to get bearish,'' said Neil Buxton at London- based GFMS Metals Consulting Ltd. The high prices ``are not choking off demand at all,'' he said.