Copper futures at 4-month high

Copper futures, which closed Friday at the highest in almost four months in New York and London, may rise for a second straight week as inventories slide and a deficit looms.

Seven of 12 analysts and traders surveyed on Thursday and Friday said prices will gain. Three forecast a drop and two predicted little change for copper, used in electrical wiring and plumbing pipes.

Copper, sold in dollars, jumped the most in five weeks on Friday after the U.S. trade deficit widened in June to a record $55.8 billion, prompting the dollar to weaken. Prices were bolstered by this year's 78 percent slump in inventories tracked by exchanges in London, New York and Shanghai.

"Copper is still a buy," Tim Evans, an analyst at IFR Markets in New York, said in an e-mail. "Falling warehouses stocks tend to confirm that the projected supply/demand deficits are still on the money."

Copper for delivery in three months rose 3 percent to $2,855 a metric ton Friday on the London Metal Exchange, the highest since April 20. The gain for the week was 2.6 percent. On the Comex division of the New York Mercantile Exchange, futures closed at $1.321 a pound.

Consumers have withdrawn metal from warehouses as analysts forecast production to fall short of demand this year.

Chile's state-owned Codelco, the world's largest copper producer, said Thursday that global demand will exceed production by 500,000 tons this year. The deficit will shrink to 100,000 tons in 2005, Francisco Tomic, Codelco's vice president of finances, said at a new conference Thursday.

Copper miners including Phelps Dodge Corp., the world's second- biggest, are boosting production to meet demand from China and the U.S. BHP Billiton, based in Melbourne and the world's largest mining company, is raising output in Chile at its Escondida copper mine, the world's largest.

Global copper demand rose 6.4 percent to 6.9 million tons the year's first five month, according to the International Copper Study Group in Lisbon. Production climbed just 1.4 percent to 6.32 million tons.

The threat of disruptions has helped boost copper prices. Grupo Mexico SA's Asarco division in the U.S. begins contract talks with unions today. On Friday, workers at the company's 180,000-ton-a-year Cananea mine in Mexico accepted a wage offer, averting a strike. Grupo Mexico agreed to pay bonuses last month at its La Caridad complex to end a 17-day walkout.

The Chinese government's efforts to slow its economy haven't damped demand, which surged 26 percent in the year's first four months, the study group said. China, the world's biggest copper user, increased investment in fixed assets like buildings and factories by 73 percent in the first half.

Norddeutsche Affinerie AG, Europe's largest copper producer, said in May that Chinese demand will rise 15 percent this year to 3.6 million tons. The Hamburg-based company last week reported a third- quarter profit of 10.6 million euros ($13 million) because of copper prices, a year after a loss.

"Good economic growth and demand for base metals remains in place," Mick Davis, chief executive of miner Xstrata Plc, said in a telephone interview on Thursday.

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