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Subject:  Copper Stockpiles Fall to 6 Month low Date:  3/14/2008  11:49 AM
Author:  EPS100Momentum Number:  35343 of 533

Copper Rises on LME as Exchange Stockpiles Fall to 6-Month Low
By Chanyaporn Chanjaroen
http://www.bloomberg.com/apps/news?pid=20602013&sid=aZA.dkHUDpM8&refer=commodity_futures

March 14 (Bloomberg) -- Copper rose as stockpiles monitored by the London Metal Exchange fell to the lowest in six months, spurring speculation supply will trail demand. Tin climbed to a record for a fourth consecutive day.

Copper stockpiles slid 2,725 tons, or 2.1 percent, to 125,225 tons, the lowest since Aug. 23, the LME said. There will probably be ``a very substantial'' deficit in the first half of this year, Barclays Capital said.

``Currently copper looks the tightest market from a fundamental perspective,'' Barclays analysts led by Kevin Norrish said in a weekly report dated yesterday. Inventories may reach an all-time low and prices rise to a record, they said.

Copper for delivery in three months added $130, or 1.6 percent, to $8,510 a ton on the LME as of 12:17 p.m. The contract headed for a 0.4 percent weekly drop, after six weeks of gains.

Copper has climbed for six consecutive years as production disruptions at mines from the Asia-Pacific region to Latin America limited supply growth while demand from China, the world's largest user of the metal, expanded. Record high prices also attracted purchases from index-tracking and pension funds.

Dwindling stockpiles on the LME pushed up the borrowing costs of copper for next-day delivery to $5 a ton per day on March 12, the highest since Feb. 14. The charge was $3.75 a ton today. The spread between the cash contract and benchmark price was bid at $110 a ton today, compared with $104 traded yesterday.

Inventories of the metal monitored by the LME, the Shanghai Futures Exchange and the Comex division of the New York Mercantile Exchange, stood at 197,864 tons, or 3.9 days of global consumption. The average was 4.9 days last year.

Comex copper for May delivery added 1.2 percent to $3.8875 a pound in after-hours electronic trade.

Strike Accord

Ok Tedi Mining Ltd., which digs for copper in Papua New Guinea, said it reached an agreement with protesting workers to end a four-day strike that halted production and shipments for the copper and gold mine.

Workers will be back at work tomorrow, spokeswoman Jane Mills said today by phone from Tabubil near the mine. The mine produced 169,184 tons of copper in concentrate last year.

Inventories of aluminum tracked by the LME advanced 19,275 tons, or 2 percent, to one million tons, the exchange said in a daily report, the highest since June 10, 2004. Aluminum gained 1.6 percent to $3,164 a ton.

PT Koba Tin, Indonesia's second-largest producer of the metal, was allowed by the local police to resume operations, Reuters reported today, citing a company spokesman Patria Nusa.

Record Tin

The police closed down Koba Tin's warehouse and smelter in January as part of an environmental dispute, Reuters reported. The company plans to produce 15,000 metric tons of refined tin this year, accounting for about 4 percent of global output, the news agency said.

Tin rose to a record for a fourth consecutive day, climbing $850, or 4.3 percent, to $20,800 a ton. The Koba Tin report didn't cause a price decline because tin, like other commodities, has been supported by purchases from investment funds which seek to use metals as a hedge against the dollar weakness, RBC Capital Markets traders led by Alex Heath said today in a report.

Nickel advanced $550 to $32,700 a ton, and lead added $39 to $3,139 a ton. Zinc fell $4.50 to $2,625.50.

To graph technical gauges for copper: Moving Averages Relative Strength Index Fibonacci Back Test Technical Gauges

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
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