Copper bounces back

The US giant plans to cut production by 14%

The price of copper has bounced back from the 15-year lows seen earlier this week.

News that the world's second-largest copper producer, Phelps Dodge, was to cut production propelled the copper price off its lows.

The news comes as the metals world congregates at London Metals Week, amid predictions of falling prices in the coming months.

On Monday, the price of copper hit $1,364 a tonne, a level last seen in February 1987. On Wednesday, the price of copper was about $1,382.

Falling demand and high inventories have conspired to keep copper prices weak.

Phelps Dodge is now set to cut 14% of its capacity, a move that will mean about 1,440 employee layoffs.

No surprise

"A cutback of any magnitude has been long coming given the weak environment that we've been experiencing, plus very high inventories," said John Gross, president of consulting firm JE Gross & Associates.

"The soft conditions were all being exacerbated by the tragic September situation."

For the copper price to recover fully, other producers should follow suit, analysts argue.

"We are looking at the lowest prices in some metals since the early 1980s as prices have been bludgeoned by the slowdown in the US and global economy," Lawrence Eagles at Commodityexperts.com told the BBC's World Business Report.

While copper has been hard hit, so have other metals such as aluminium and zinc, he said.