Tighter supplies fortify copper, lay foundation for price rally
* Analysts' disruption allowance likely to be exceeded
* Market to look at specific copper issues after Fed rate rise
* Escondida expected to produce less in H2 than H1
By Pratima Desai
LONDON, Aug 6 (Reuters) - Power outages, strikes, floods and drought as well as lower grade source material are tightening copper supplies, potentially pushing the market into deficit earlier than expected and laying the ground for price gains later this year.
Estimates of how much copper output will be lost vary. Morgan Stanley puts the amount at about 500,000 tonnes so far this year, while ICBC Standard Bank reckons an annualised 1.33 million tonnes.
Some of the news on supply problems has come over the last couple of weeks, after a Reuters survey in July showed analysts expected a 194,000-tonne surplus this year.
In a 22-million-tonne market the numbers are not large, but they are expected to rise as problems persist.
Analysts typically allow for output disruptions at about 4.5 percent, but given the outages already seen, the total in December could be much higher, possibly more than 7 percent. Continued...