DO,

"There are too many forward-driving forces that will sustain increasingly higher metal prices (scarcity, strikes, developing economies)."

Well put, Sort of sum's my feelings up at the moment.

Associated Press - 8 August 2006

Strike begins at copper mine in Chile

Workers at the world's largest privately owned copper mine in northern Chile went on strike Monday to press their demand for better pay, and by midday production was down by 60 percent, a company official reported.

Union spokesman Pedro Marin said workers were gathering at a plaza in Antofagasta, 1,600 kilometers (995 miles) north of Santiago, for a planned march.

Other miners blocked an access road to the mine with rocks and parked buses.

A union assembly was scheduled for late Monday and a vote on the company's contract proposal was likely, Marin said. The proposal was rejected by the union leadership.

The company has called its contract offer, made in government-mediated talks, final. It includes a 3 percent salary increase and one-time bonus of US$17,000 (13,200).

The workers are asking for a 13 percent wage increase and a bonus of US$21,190 (18,400).

There was no immediate comment by the company on Monday's work stoppage but it said earlier that it would implement a "contingency plan." No details of the plan were announced, but Marin said it includes hiring around 1,000 outside workers and contractors to maintain some production.

Around noon Monday, a company spokesman, Mauro Valdes, told the Santiago daily El Mercurio that production had dropped by around 60 percent.

Escondida produces around 3.6 metric tons (4 tons) a day, or around one quarter of Chile's total output. Chile is the world's largest copper exporter.

The Australian-British consortium BHP Billiton PLC owns 57.5 percent of the mine, while Rio Tinto PLC, also Australian-British, holds 30 percent, and the Mitsubishi Corp.-led Japanese consortium 10 percent.

Main markets for the mine's production include Brazil, China, France, Japan and South Korea.

Strike starts at Chile copper mine

By Pav Jordan Mon Aug 7, 2:05 PM ET

SANTIAGO, Chile (Reuters) - Workers drew first blood in their fight with Chile's Escondida copper mine, cutting 60 percent from daily production as they walked off the job to demand a wage and benefits hike from its foreign owners.
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"Around 60 percent of output," is being affected by the strike, BHP Billiton spokesman Mauro Valdes told Reuters on Monday, hours after the widely anticipated walkout. Workers said the strike cut production by as much as 80 percent.

The mine, the world's largest copper mine, applied an immediate contingency plan to maintain basic output, but Valdes could not say what the effects of a prolonged strike might be.

"Minera Escondida reiterates it desire to maintain dialogue (with workers) and trusts the strike will be carried out in a responsible and legal form," the company said in a statement.

Workers at Escondida, which produces about 20 percent of Chile's copper and accounts for 2.5 percent of the country's gross domestic product, are demanding a new contract to replace a 2003 deal that was signed when copper prices were about a fifth of what they are now.

Local television showed union workers tossing rocks the size of basketballs onto the road leading to the mine in northern Chile to obstruct the potential entry of transports carrying replacement personnel.

Talks between the company and the union grew increasingly combative in recent weeks, with each accusing the other of not ceding ground in their demands.

Union President Luis Troncoso said there was no plan to halt the strike until the company improves its offer.

Workers say they have the support of other Chilean mining unions, and that their fight could influence the outcome of upcoming negotiations at Codelco, Chile's state copper miner and the world's largest producer of the red metal.

"I think we are fortifying the (national) union movement," Troncoso said.

BHP Billiton (BHP.AX), the world's largest miner, owns 57.5 percent of the open-pit mine, while No. 2 Rio Tinto Ltd (RIO.AX) has a 30 percent stake.

While workers are demanding a large increase in salary and benefits that reflect soaring copper prices, the company seeks to protect itself from the next cyclical downturn in prices for the red metal.

Before the strike, Escondida was expected to produce close to 1.3 million tonnes of copper in 2006, about the same as it did in 2005. That is roughly 3,500 tonnes of copper a day.

Copper futures in New York opened lower Monday but prices received a slight boost as the Escondida strike started.

More than 2,000 union workers were to take part in the strike at Escondida after negotiations for a new wage contract failed even after government mediation.

Union Secretary Pedro Marin said the workers would also march in Antofagasta, the major city in the mining region, to press their demands for a better wage deal.

He expected to draw support from others who use the city as a base and work in other mines in the region.

Chile is the world's largest copper producer and host to many international miners.

Marin said the union planned to employ noisy tactics like the ones used by Chilean students in nationwide protests in June. Those strikes ended in sometimes violent clashes with police.

Nearly 1 million Chilean students took part in nationwide strikes in early June as they demanded more education funding in destructive marches in the capital Santiago.

Escondida miners reject BHP Billiton pay offer

Workers at the world's largest copper mine in Chile have rejected an offer from owner BHP Billiton and have said they anticipate a walk-out that could last a month.

The workers late Monday (local time) refused to vote on a proposal from the Anglo-Australian resources giant put forward on Friday, leaving the mine's production at less than half of normal.

In a meeting of nearly 2,000 workers, the miners decided the 3 per cent wage hike plus $US16,000 per-worker bonus the company offered was not enough, union spokesman Pedro Marin said.

They are seeking a 13 per cent pay increase and a $US30,000 payment per miner, he said.

The strike began Monday (local time), jeopardising 8 per cent of global copper production and spurring prices to a three-week high.

The mine's main customers are Japan, Germany, Canada, China, Sweden, Brazil, South Korea and France.

Miners say their demands reflect a tripling in global copper prices since the previous collective bargaining agreement reached three years ago.

Escondida produces on average 125,000 tonnes of copper per year, nearly 20 per cent of total production in Chile, the world's largest copper producer.

-AFP

Mineweb - 09-AUG-06 - By: Dorothy Kosich

Labor strife could impact up to 16% of copper supplies


As BHP Billiton declared force majeure Tuesday for copper concentrate delivery and suspended cathode production at the world's largest copper mine, Escondida's reduced production--if compounded by additional labor strife at other copper mines--could result in the loss of 16% of the world's copper mine production this year.


Meanwhile, Japanese and Chinese metals smelter companies said Tuesday that it's too early to determine the impact of the Escondida mine strike in Chile on copper concentrate smelting. The workers at the world's largest copper mine Tuesday predicted their walkout could last as long as a month.

Sydney-based Commodities Analyst Alan Heap of Citigroup said the "copper industry has been plagued by union disputes for months now, as minesite workers seek a greater share in their booming sector." In fact, Heap declared that he expects more of the same this month as 2,000 workers at Escondida went on strike this week and their Peruvian colleagues at Antamina want an 18% wage increase. Miners at British Columbia's Highland Valley copper mine are expecting a "generous September contract renewal,"" he added.

Managers at Falconbridge's Lomas Bayas copper mine in Chile averted a strike last May with a deal that included an 8 % pay raise and $4,400 individual worker bonus payment. The FMC union, which represents the striking miners at Escondida, is asking for a 13% pay raise and a $30,000 net bonus per workers. Union Secretary Pedro Marin said Chile's copper companies will have combined profits of $19.15 billion this year. Meanwhile the copper price has risen from 67-cents when the last wage contract was negotiated in 2003 to $3.50 per pound.

Later this year, the world's largest copper miner state-owned Codelco of Chile will have salary negotiations with its own workforce. The Escondida walkout is believed to be influencing the future of the Codelco talks as the Chilean Government scrutinizes BHP's responses to the labor dispute.

Last month, Mexico's Grupo Mexico fired around 2,000 workers at its La Caridad copper mine in the Sonora State in the wake of a strike to protest the firing of a union chief, which began in March. Meanwhile, managers at the Konkola copper/cobalt mine in Zambia agreed to a 20% hike in wages in July. The mine is a joint venture between U.K.-based Vedanta Resources and the Zambian Government.

Heap said that "it's not surprising that copper's price is sensitive to this news. These strike-bound operations alone represent 2.2MTpy of copper-producing capacity or 16% of the forecast mine production in 2006." He estimated that year-to-date total contained metal production lost to strike action stands at 79k without considering loses caused by equipment failures and material shortages.

Heap said that Japan's smelters are most vulnerable to the Escondida strike since they depend on 70% of the Chilean copper mine's annual output. Escondida produces roughly 20% of Chile's total annual production. The company's products are shipped to Japan, Germany, Canada, China, Sweden, Brazil, South Korea and France.

Reuters reported that officials of both Japanese and Chinese metals smelting companies expected a prolonged strike at Escondida, but explained it was too early to determine its impact on their production. Japanese smelters are believed to hold about one month's worth of copper concentrate inventories, according to sources quoted by Reuters.

Copper is used in electrical, electronic, and other applications, as well as transportation systems, housing, commercial construction and appliances. The base metal is used in plumbing, automobile, trains and planes, and most other machinery that uses electricity or has water flowing through its engines. The average American home has at least 30 to 40 motors that rely on copper wires inside the motor.

A force majeure is a contract clause that releases a company from its contractual obligations due to an extraordinary event beyond its control.

BHP Says It Wants Agreement With Striking Chile Copper Workers

Aug. 10 (Bloomberg) -- BHP Billiton, the world's largest mining company, said it wants to reach an agreement with the union at its Escondida mine in Chile to settle a strike that cut copper output.

Road blocks laid by workers earlier in the week at the mine, the world's largest copper supplier, have been cleared, said Emma Meade, a spokeswoman at Melbourne-based BHP Billiton., Pedro Marin, the union's spokesman, yesterday said BHP Billiton hadn't offered a new wage proposal to workers in meetings this week.

``We are committed to continuing discussions with the union to reach a mutually agreeable outcome,'' BHP's Meade said in an e-mail.

The strike this week at the northern Chilean mine helped drive up copper prices in New York and London. BHP Billiton, the world's largest mining company, has said the labor dispute may disrupt deliveries of copper concentrate, which usually contains about a third copper.

MCX expecting three-fold jump in daily turnover


Ludhiana, Aug 09, 2006 (Asia Pulse Data Source via COMTEX) -- Enthused by the growing participation of traders and users in metal trading, the Multi Commodity Exchange (MCX) of India Limited is anticipating more than a three-fold increase in the per day value of trading and volume of metals traded by the end of this fiscal.

"With more and more traders and users of non-ferrous metals participating in metal trading, we expect that the daily trading and volume of metals, including copper, zinc and aluminum will increase over three times against present position by the end of this financial year," MCX, Manager (Product Knowledge Management), Ankit Singhal told PTI here.

Singhal was here to attend a seminar on metal trading.

At present, the per day turnover (single sided) of copper, zinc and aluminum in MCX stands at Rs 900 crore, Rs 150 crore and Rs 50 crore respectively. But the exchange expects daily turnover of Rs 3,000 crore in copper, Rs 400 crore in zinc and Rs 200 crore in aluminum by the end of this fiscal.

Similarly, it hopes that the per day volume size should jump to 50,000 MT in copper, 20,000 MT in zinc and 4,000 MT in aluminum.

The commodity exchange expects maximum participation in metal trading from Maharashtra, Delhi, Gujarat, Punjab and Madhya Pradesh.

The MCX has also tied up with Comex (New York based exchange) for copper and London Metal Exchange (LME) for other metal commodities for sharing expertise and knowledge in the trading.

Copper in London Rises to 3-Week High on Chile Strike Concern

Aug. 10 (Bloomberg) -- Copper prices in London rose to their highest in more than three weeks amid concern that supply growth may lag demand because of a strike at Chile's Escondida, the world's largest mine.

Union leaders at the mine, which supplied 8.5 percent of global mined copper last year, shelved talks yesterday after the lack of progress at a meeting a day earlier. BHP Billiton, which owns a controlling stake in Escondida, will meet the union today at 5 p.m. local time. BHP has said it may stop deliveries to smelters in Asia and Europe because of the stoppage.

``It looks like the strike's impact to production at the mine may be quite big'' as negotiations are still inconclusive, Yuan Fang, a metal futures trader at Shanghai Dongya Futures Co., said by phone today.

Copper for three-month delivery rose as much as $70, or 0.9 percent, to $8,100 a metric ton on the London Metal Exchange, the highest since July 17. The metal traded at $8,082 at 12:16 p.m. Singapore time.

Metal for delivery in October rose as much as 2,560 yuan, or 3.8 percent, to 70,250 yuan ($8,818) a metric ton on the Shanghai Futures Exchange. It traded at 70,020 yuan by midday break at 11:30 a.m. local time.

Pedro Marin, a union spokesman at Escondida, said leaders are evaluating whether to return to the negotiating table. ``We don't want more of the same,'' he said yesterday by phone from the city of Antofagasta.

``We are committed to continuing discussions with the union to reach a mutually agreeable outcome,'' Emma Meade, a spokeswoman at BHP Billiton in Melbourne, said in an e-mail today. BHP Billiton, the world's largest mining company, offered a rise of 3 percentage points above the inflation rate compared with workers' demands for a gain of 13 percentage points.

Copper for cash delivery in Changjiang, Shanghai's biggest spot market, rose as much as 2.9 percent to 69,900 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.

Copper for delivery in September rose 1.5 cents, or 0.4 percent, to $3.725 a pound on the Comex division of the New York Mercantile Exchange at 12:08 p.m. Singapore time in after-hours trading.

BHP Says Chile Copper Stockpiles Are Low, Talking to Customers

Aug. 10 (Bloomberg) -- BHP Billiton said copper concentrate stockpiles at its Coloso port in Chile are ``very low'' and was talking to customers about deliveries after a strike at the world's largest copper mine stretched to a fourth day.

Supplies from the Escondida mine, which is operating at 40 percent capacity, are running down, Emma Meade, a spokeswoman for the Melbourne-based company said today.

The strike at the northern Chilean mine is helping drive up copper prices in New York and London. BHP Billiton, which owns 57.5 percent of the mine, has said the dispute may disrupt deliveries of copper concentrate, which usually contains about a third copper.

``With concentrate, the stockpiles at Coloso are actually very low,'' Meade said. ``We're running at 40 percent and we just need to talk to them about how we meet their requirements going forward. We're just going to be able to ship what we produce.''

Shares in BHP Billiton, the world's largest mining company, fell as much as 31 cents, or 1.1 percent, to A$26.92 on the Australian Stock Exchange. They traded at A$27.22 at 3:15 p.m. Sydney time.

Mine management and labor union workers are meeting again to discuss workers wage claim today after talks were postponed yesterday, Meade said.

``We are committed to continuing discussions with the union to reach a mutually agreeable outcome,'' BHP's Meade said in an e-mail.

Road blocks laid by workers earlier in the week at the mine were cleared. Pedro Marin, the union's spokesman, yesterday said BHP Billiton hadn't offered a new wage proposal to workers this week.

AFX - 14 August 2006


SEOUL (XFN-ASIA) - The world's fifth largest steel maker, POSCO, has rejected reports it is having trouble covering nickel short positions on the London Metal Exchange (LME) and is being forced to roll them forward at increasingly greater expense.

'It is a groundless market rumor,' a POSCO spokesperson said. Nickel is a key ingredient for making stainless steel.

Earlier The Wall Street Journal reported that POSCO, was short by 10,000 tons of nickel against its LME positions, having bet prices would fall. Prices though, as a result of strong demand from stainless-steel producers, have been on an upward trend this year.

'It makes no sense. The positions for POSCO to cover is less than 1,000 tonnes -- a futures deal traded in April,' the POSCO spokesperson said.

The POSCO official also rejected the report's claim that POSCO was some 20,000 tons short on the physical nickel market, after it underbought against its customer requirements.

'POSCO, a steel maker, is the very consumer, not a speculator, of nickel. Most of its demand is supplied by long-term contracts,' the official said.

The report said although the price at which POSCO went short, or bet that the price would fall, isn't known, to buy 30,000 tons of nickel on the LME and physical market currently would cost at least 810 mln usd based on an LME price of 27,000 usd a ton. In London Friday, nickel for delivery in three months time closed at 26,600 usd a ton on Friday.

Reuters - 14/08/2006 13:42

Copper higher on supply upsets


London - Copper prices rallied on Monday as supply started to get tighter in the biggest consumer of the metal and as a strike at the world's largest copper mine moved into a second week.

"Metals are consolidating just below recent peaks on supply disruptions," UBS analyst Robin Bhar said.

London Metal Exchange (LME) copper was up $100 at $7 670/7 690 a tonne at 09:40 GMT, completing its recovery from the 4% loss seen at one point on Friday after talks resumed at the key Escondida mine in Chile between the union and majority owner BHP Billiton.

The union's president said on Sunday that talks might last another week at the mine, which accounts for 8% of the world's copper output.

Copper hit a record $8 800/tonne in May.

In China, which consumes a fifth of the world's copper, recent sales of metal by Beijing's State Reserves Bureau had been weighing on futures prices in Shanghai and London, sharply reducing the country's imports and encouraging exports.

But that selling programme may now be reaching its conclusion.

"The SRB was looking to sell 100 000 tonnes of copper this year. They look to have sold 60 000 to 80 000 tonnes. Those sales have depressed the local market to the point where it was not worthwhile importing copper," Bhar said.

"But as those sales dry up, local prices could pick up again and encourage more Chinese imports," he added.

Dealers noted that with the exception of the soon-to-expire August contract, prices for nearby Chinese copper futures were now above prices for material for delivery further in the future, known as backwardation.

"The gap between Shanghai and the LME is narrowing again. You can see it most clearly when the LME tanks and Shanghai doesn't fall as much," a futures trader at a Chinese copper producer said.

Nickel prices also rose, with three-month futures at $26 850/27 000, versus $26 700 and holding short of last week's record $27 300.

South Korean steel producer Posco Co Ltd on Monday dismissed a Wall Street Journal report that it held a loss-making short position of 10 000 tonnes of nickel on the LME and of an additional 20 000 tonnes in the physical market.

A Posco official said the company was short by less than 1 000 tonnes on the LME, and denied the company had speculated on falling nickel prices.

Stocks of nickel in LME warehouses were 5 940 tonnes, of which nearly 3 600 tonnes have already been earmarked for delivery. Daily world nickel consumption is around 3 500 tonnes.

"Nickel availability should improve but in the near term the market looks to remain very tight," a London trader said.

In addition to low stocks and strong demand from stainless steel makers, nickel prices are firm after a strike at Inco, which began shutting down production at the end of July at its 54 000 tonne-per-year, Voisey's Bay nickel mine in Canada.

Aluminium was up $10 at $2 530/ ,535 and zinc gained $30 at $3 290/3 320.

COMEX copper ends near highs amid spread dealings

NEW YORK, Aug 14 (Reuters) - Copper futures in New York ended near their session highs in extremely thin dealings on Monday, as traders focused on the September/December roll while uncertainty over the outcome of the Escondida labor strike held the buyers at bay, sources said.

"Last week, we started our roll from September into December, and while the bulk of it was done last week, some people may have anticipated some more selling to start the week, but when it never materialized and they turned buyers of the spread later in the day, one COMEX floor dealer said.

Copper Rises for 2nd Day in London; Aluminum and Nickel Gain

Aug. 15 (Bloomberg) -- Copper rose for the second consecutive day on the London Metal Exchange. Aluminum and also gained, while nickel matched its all-time high.

Copper for delivery in three months on the LME increased $90.50, or 1.2 percent, to $7,740 a metric ton as of 10:14 a.m. local time. Nickel increased $150 to $27,250 a ton, after earlier trading as high as $27,300, equaling the record set Aug. 11. Aluminum gained $26 to $2,507.

Tuesday August 15

Broker snap: Miners a mixed bag

LONDON (ShareCast) - The mining sector was given a knock today after Lehman Brothers issued a mixed note on the industry, trimming forecasts across the board.

The broker reduced its earnings estimates on BHP Billiton , Rio Tinto, Xstrata and Anglo American, arguing that high commodity prices will offer investors little upside going forward.

Lehman suggests that with a number commodity prices trading near record highs, investors should move their attention from high-risk stocks such as Vedanta to low-risk miners such as Rio Tinto.

The broker kept its "overweight" recommendation on Rio Tinto, BHP Billiton and Xstrata but said Vedanta remains "equal-weight" and Anglo American "underweight".

Aug 15, 2006 (TradeSignals via COMTEX) -- Copper:

Copper trade on ACCESS is showing weaker prices in recent activity reversing the firmer tone seen during the prior session. Trend indicators are indicating a bearish market. However the overall strength of the trend, as indicated by the ADX, is weak and should be watched as a result. Momentum readings are also in bearish territory.


Simple Moving Average (10-Day): Recent activity this morning has seen prices trade below this moving average. Also, the slope of the moving average is in a downward slope from the previous session indicating further weakness. As a result the 10-Day simple moving average has a strong bearish bias.


Simple Moving Average (25-Day): Recent activity this morning has seen prices trade below this moving average. Also, the slope of the moving average is in a downward slope from the previous session indicating further weakness. As a result the 25-Day simple moving average has a strong bearish bias.

Aug. 16 (Bloomberg) - Copper Declines in Shanghai on Expectations Escondida Strike May Soon End

Copper fell in Shanghai for the fourth day on expectations that a strike at Escondida, the world's biggest copper mine, may end soon.

BHP Billiton, the world's biggest mining company, and a union in Chile yesterday met for the first time this week seeking to resolve the stoppage, which has slashed production at the site. The two sides discussed vacation and educational benefits, union President Luis Troncoso said yesterday.

``It looks like the talks are going on rather smoothly,'' Yuan Fang, a metal futures trader at Shanghai Dongya Futures Co., said by phone today. ``Given the lack of market news, people are trading on the back of these negotiations.''

Metal for delivery in October fell as much as 530 yuan, or 0.8 percent, to 67,100 yuan ($8,389) a metric ton on the Shanghai Futures Exchange. It traded at 67,480 yuan at 9:30 a.m. local time.

Copper for delivery in December fell 2.4 cents, or 0.7 percent, to $3.4655 a pound in after-hours trade on the Comex division of the New York Mercantile Exchange at 9:29 a.m. Singapore time.

``There is progress,'' Troncoso said by telephone from the city of Antofagasta. ``We will keep talking.''

The company's refusal to meet demands to raise wages by 13 percentage points above inflation, which reached 3.8 percent annually in July, and pay a bonus of 16 million pesos ($29,575) per worker led to the strike, which began Aug. 7.

The walkout cut processing capacity at Escondida by about half, BHP Billiton spokesman Mauro Valdes said yesterday by telephone. The mine, located in northern Chile, accounted for 8.5 percent of all mined copper worldwide last year.

`` I'm encouraged that there is dialogue,'' David Thurtell, a metals analyst at BNP Paribas in London, said. ``At least the talks haven't broken down. That's slightly on the bearish side.''

Copper for three-month delivery on the London Metal Exchange rose $10, or 0.1 percent, to $7,660 a ton at 9:31 a.m. Singapore time.

Copper, Zinc Prices Tumble on Speculation Demand May Slow

Aug. 17 (Bloomberg) -- Copper prices fell the most in a month and zinc tumbled almost 6 percent on signs U.S. economic growth will continue to slow, curbing demand for metals.

Before today, copper had jumped 75 percent this year, partly because of supply disruptions in China, Indonesia and Mexico. The U.S. index of leading economic indicators unexpectedly dropped in July, the New York-based Conference Board said today. That marked the third report this week to show expansion is cooling. Lead, aluminum and nickel also dropped.

``It's a commodity-wide sell-off,'' said Robin Bhar, an analyst at UBS AG in London. ``Fears of a U.S.-led slowdown'' triggered the drop, he said.

Copper for delivery in three months declined $410, or 5.3 percent, to $7,290 a metric ton on the London Metal Exchange, the biggest percentage decline since July 20. Prices still have doubled in the past year. The U.S. is the world's second-biggest copper consumer behind China.

Zinc dropped $199, or 5.9 percent, to $3,201 a ton in London. Prices are up 68 percent this year.

Copper futures for December delivery fell 10.70 cents, or 3.1 percent, to $3.320 a pound on the Comex division of the New York Mercantile Exchange, the lowest since late June.

Speculation that a strike may end soon at the world's biggest copper mine in Chile helped drive prices lower.

The union at the Escondida mine is holding talks with management today to settle the 11-day stoppage.

Workers are seeking a wage increase 10 points above Chile's inflation rate, down from the 13 points above inflation it wanted as recently as yesterday.

Closer to Agreement

``They are closer rather than further away to coming to an agreement,'' said Mark Liinamaa, a metals analyst with Morgan Stanley in New York. ``It's really conciliatory over there. The situation is looking much more approachable to a settlement in the near term.''

BHP Billiton Ltd., which owns more than 57 percent of the mine, can reallocate funds within its salary offer, though it won't increase the value of the package, Illtud Harri, a spokesman for the company in London, said today.

Management also has offered to pay a bonus of 8.5 million pesos ($16,032) per worker. Escondida's Workers' Union No. 1 wants a bonus of 16 million pesos along with the wage increase tied to the rate of inflation, which was an annual 3.8 percent in July.

The strike has cut output by half at Escondida, which produced 8.5 percent of copper from mines worldwide last year. The stoppage is costing the mine as much as $16 million a day in lost profit on average, mine management said yesterday.

``For most of the metals, it's the supply side of the equation that I think is going to be most important to determine price movement from here,'' Liinamaa said.

Industrial Production Slips

Industrial production in the U.S. grew less than forecast in July, a government report showed yesterday. Housing starts fell 2.5 percent to an annual rate of 1.795 million, and building permits declined 6.5 percent, the most since September 1999, the U.S. Commerce Department said in a separate report.

Builders are the biggest users of copper in the U.S, accounting for about 40 percent of demand. An average single-family home contains about 400 pounds of the metal, according to the Copper Development Association.

Today's report is ``suggesting that together with yesterday's weak housing numbers, the U.S. economy is slowing,'' Bhar said.

Lead price in London dropped $42, or 3.4 percent, to $1,185 a ton. Nickel tumbled $1,400, or 4.8 percent, to $27,700. Aluminum declined $41, or 1.6 percent, to $2,460.

DJ Comex Copper Review: Lower On Escondida Strike Rumors

NEW YORK (Dow Jones)--A nervous tone continued to dominate the Comex copper
market as futures prices dipped sharply lower Thursday amid speculation the
11-day strike at Chile's Escondida copper mine ended, despite reports to the
contrary.

At settlement on the New York Mercantile Exchange, Sept. copper is down 11.25
cents at $3.3575 per pound. During the session speculation began to mount that
the strike at Escondida had ended. The talk took the Sept. contract down to a
$3.29 low - its lowest level since July 24.

But soon after the quick sell-off, news from Santiago quoted union leaders as
saying that any strike settlement was days away.

"I want to be very clear about this: The only problem we have (with the
company) happens when we reach the subject of the wage increase," union
president Luis Troncoso told reporters Thursday following a meeting with other
union leaders in the industry.

"The talks have a few more days to go," Troncoso said, adding that Escondida
negotiators have sought to leave the sticking points, such as salaries and
bonuses, to the last possible moment.

Traders at Triland Metals said it appears the union has been making some
concessions and that the market apparently has priced in a settlement within
this week.

They added that U.S. leading indicators showed a drop of 0.1% Thursday,
putting some pressure on the entire metals sector.

"Buying interest was limited and prices dropped below the 100 day moving
average (seen at $3.2929) at one point before recovering on some closing based
orders," the traders said in a report.

Reuters - Fri Aug 18, 2006 12:43 PM - By Nick Trevethan

Copper rises on Escondida mine closure


LONDON (Reuters) - Copper prices bounced in London on Friday after the world's largest copper mine said it was suspending operations as talks with striking workers collapsed.

Copper for delivery in three months traded at $7,470 a tonne at 1001 GMT, versus $7,290 at the close of trade on Thursday.

Copper has recovered over half of Thursday's more than five percent drop after BHP Billiton said it was closing its Escondida copper mine in Chile because workers had blocked access roads to the mine for two days and had put at risk the health and security of people working there.

"We will not negotiate while the union carries out this illegal activity and will be taking legal action to resolve this," a BHP Billiton spokesman said.

Escondida, which churns out eight percent of the world's copper, had been operating at around half speed due to the 12-day strike over pay and bonuses.

"There is a strong element of brinkmanship going on. I don't know what BHP Billiton's negotiating objectives are, but it seems it wants to transfer commodity price risk to the workforce," an LME dealer said.

The union is holding out for a $30,000 special bonus for each worker and a 10 percent raise, citing $2.9 billion net profit at Escondida in the first half of the year. BHP has responded with an offer of 3 percent above inflation and a bonus of around $16,000.

"The pay award will set a benchmark for other labour settlements so there is a question about how much encouragement BHP is getting to take a tough stance from other producers, including government-owned Codelco," the trader said.

Copper Rises as BHP Closes Chile's Escondida, World's Top Mine

Aug. 18 (Bloomberg) -- Copper prices rose after BHP Billiton shut down the world's biggest copper mine and called off talks with a striking labor union as workers blockaded roads to the Escondida site in Chile.

BHP Billiton, the world's largest miner, will take legal action against the union over the obstruction, spokeswoman Emma Meade said. The escalation of the dispute may intensify concern that global copper production can't meet demand. Escondida accounts for 7 percent of global copper usage, based on its first-half output, according to Numis Securities in London.

``There are indications that this could go on for much longer than the market expected,'' said Peter Hickson, global commodities strategist for basic materials at UBS AG in London. The strike may have ``far more impact on what is already a very short copper market.''

Copper for delivery in three months on the London Metal Exchange rose $140, or 1.9 percent, to $7,430 a metric ton as of 1:30 p.m. local time, after earlier rising 3.3 percent to $7,530. The metal, used in wiring and plumbing, has more than doubled in the past year. It rose to a record $8,800 on May 11.

Copper futures for September delivery on the Comex division of the New York Mercantile Exchange gained 4.5 cents, or 1.4 percent, to $3.36 a pound. Prices were down 1.7 percent for the week in New York and 1.3 percent in London. A futures contract is an obligation to sell or buy a commodity at a fixed price for a specific delivery date.

Metals briefly pared gains after China, the world's biggest consumer of copper, raised its benchmark lending and deposit rates to curb an investment boom that the government says threatens to fan inflation and leave the nation with surplus manufacturing capacity.


`Far Apart'

The stoppage at Escondida doesn't constitute a lockout and management wants to resume production ``as early as possible,'' BHP Billiton said. The strike started Aug. 7. Before the mine's closure, production had fallen by about half.

Escondida's Workers' Union No. 1 wants wages increased by 10 percentage points above inflation, which was 3.8 percent annually in July, having reduced an initial demand for a 13- point wage increase. Union leaders have said workers' wages need to reflect the surge in copper prices. BHP has offered a rise of 3 percentage points above inflation.

``Escondida management and the union remain far apart in terms of negotiations,'' said Simon Toyne, an analyst at Numis. ``For all other copper players, Escondida striking is clearly advantageous in the short term.''