April 7 (Bloomberg) -- Copper futures fell in New York for the third time in four sessions as mining companies such as BHP Billiton Ltd. are boosting production after prices reached an eight-year high last month.

Codelco and Phelps Dodge Corp., the world's largest copper producers, will increase output this year, and BHP said yesterday it will expand the world's biggest copper mine. Global supply lagged demand last year for the first time since 2000, sending prices up 80 percent in the past year.

``When pricing gets this high, you have to expect producers will take advantage of it,'' said Michael Guido, director of hedge-fund marketing and commodity strategy at Societe Generale in New York.

Copper for May delivery fell 0.4 cent to $1.315 a pound at 10:52 a.m. on the Comex division of the New York Mercantile Exchange. Prices have dropped 6.3 percent from a high of $1.403 on March 2.

On the London Metal Exchange, copper for delivery in three months fell $10 to $2,910 a metric ton ($1.32 a pound). Warehouses approved by the exchange held 176,600 metric tons of copper, down 78 percent from a year ago.

Shares of Phelps Dodge fell $2.45, or 2.9 percent, to $80.80 in New York Stock Exchange composite trading. The stock has more than doubled during the past year, reflecting the jump in prices.

Australia's BHP Billiton yesterday announced plans to expand production at its Escondida mine in Chile, the world's biggest copper mine, by 180,000 tons in the second half of 2006. Melbourne-based WMC Resources Ltd. said its copper production will rise this year to 230,000 tons from 160,080 tons last year.

Rising Output

The announcements follow plans by the biggest producers to boost their output. Codelco, Chile's state-owned copper producer, plans to increase production by 13 percent this year, as demand is forecast to outpace supply, Francisco Tomic, vice president of finance, said last month. Phoenix-based Phelps Dodge is increasing output by 12 percent this year.

Even with the increased supply, a copper supply deficit is forecast through next year, reaching 500,000 metric tons this year and another 140,000 tons next year, leading to more inventory declines, Phelps Dodge forecast last month.

Last year, copper supply from mining companies and scrap yards fell short of demand by 312,000 tons, compared with a surplus of 197,000 tons in 2002, according to the International Copper Study Group, a government group based in Lisbon.

The copper rally was fueled largely by growing demand from China, the world's biggest user of the metal, and the prospect of increased demand in the U.S. and Japan.

Growing Economy

China's economy grew 9.1 percent last year as demand for cars, homes and appliances rose. In the U.S., the second-biggest user, the lowest interest rates in more than four decades are fueling a housing boom. Construction is the biggest use for copper, accounting for 40 percent of demand.

A rise in U.S. metals consumption at a time of growth in China ``will mean many minerals and metals are in short supply,'' Rio Tinto Plc Chairman Paul Skinner said at the company's annual meeting in London.

``Improving global economic conditions will mean robust demand for metals and minerals and higher prices from which we can expect to benefit,'' Skinner said.

Rio Tinto owns Kennecott Utah Copper Corp. and its Bingham Canyon mine near Salt Lake City, the second-biggest U.S. copper mine. Phelps Dodge's Morenci mine in Arizona is the biggest U.S. copper mine, according to the U.S. Geological Survey, which is part of the Interior Department.

To contact the reporter on this story: Claudia Carpenter in New York at ccarpenter2@bloomberg.net.

Last Updated: April 7, 2004 10:54 EDT