PHELPS DODGE <PD> SEES STRONGER COPPER PRICES
Phelps Dodge Corp officials said good
fundamentals in copper markets should lead to improving prices
for the metal.
    In an interview with Reuters, chairman G. Robert Durham
said continued strong demand and low inventories pushed prices
up eight to nine pct on the New York Commodities Exchange last
month.
    "Our customers in this country are living off the tailgates
of our trucks," he said, referring to tightness of supply and
strong demand. "The fundamentals are good."
   
    Asked if metal prices will continue to rise, Durham said;
"All I know is, fundamentals cannot be ignored."
    He said copper supplies are lower than they have been for
almost 20 years. Last year, copper demand was second highest on
record behind 1984, he said.
    Phelps Dodge is the nation's largest copper company, with
annual production expected to reach 500,000 tons this year.
   
    During the interview, executive vice president Douglas
Yearley said he believed it was only a matter of time before
the copper price rose "because there aren't that many new
projects coming on, and demand, short of a major recession,
will continue to grow modestly."
    Copper for July delivery rose more than two cts a pound to
more than 69 cents in Comex trading today. A one cent a pound
rise in copper prices yields 10 mln dlrs in annual earnings for
Phelps Dodge, the company said.
    "Demand has been surprisingly good in 1987, in construction
and other areas," Yearley said.
   
    New production later this year from a Bingham, Utah, mine
owned by Kennecott Corp, a unit of British Petroleum Co PLC's
<BP> Standard Oil Co, a mine in New Guinea and Phelps Dodge's
own expanded Morenci, Ariz., mine will be offset by production
shortfalls in Mexico and Zambia, he said.
    Durham said production costs at the New Mexico-located
Chino mine will be in line with conventional copper production
at the company's other mines by the fourth quarter. The
company's total production costs, including depreciation but
before interest and corporate expense, should be below 50 cts a
pound by late 1989 or 1990, he said.
 Reuter
