Chile Strike Threatens Copper SupplyCopper Advances in Asia Trade as Chile Strike Threatens Supply By Glenys Sim
April 22 (Bloomberg) -- Copper advanced in Asia as a strikeby contract workers in Chile threatens to disrupt supplies at atime of falling global inventories.
Codelco, the world's largest producer, said yesterday threeof four mining divisions had been idled by a violent six-daystrike as union leaders representing employees of the company'scontractors began talks with the government.
``With exchange inventories adding up to less than fourdays of demand coverage, the copper market seems ill-equipped tocope with any significant reduction in supply,'' wrote FranciscoBlanch, head of global commodities research at Merrill Lynch &Co., in a report e-mailed today. ``We expect the copper price toonce again push towards its record high.''
Copper for delivery in three months rose $120, or 1.4percent, to $8,640 a metric ton on the London Metal Exchange at5:46 p.m. Singapore time. The contract rose to a record $8,880 aton on April 17 after workers at Codelco went on strike.
El Teniente, one of Codelco's mine units, closed for the dayafter an employee was hit and injured by a metal object, theSantiago-based company said late yesterday in an e-mailedstatement. The Andina and Salvador mines closed when the strikebegan April 16, and Norte, the biggest, is operating normally.
July-delivery copper on the Shanghai Futures Exchange endedthe day up 0.4 percent at 64,390 yuan ($9,212) a ton. Averageprices of copper for immediate delivery in Changjiang, Shanghai'sbiggest cash market, have fallen 11 percent from a year ago asdomestic demand weakened.
``It's the seasonal peak for demand now, but we're seeingquite muted buying in the physical market,'' Pang Ying, ananalyst at Shenzhen Rongtuo Trading Co., said by e-mail today.``It can't be considered bad but it's definitely not good.''
Tightening Credit
``The tightening credit situation in China is not helpingdemand as many small processors are now unable to buy forward,''said Pang.
China's central bank ordered lenders to set aside more oftheir deposits as reserves for the third time this year on April16 in an effort to curb inflation. Banks extended 283.4 billionyuan ($40.5 billion) of new loans in March, down 36 percent froma year ago.
Inventories of copper in London Metal Exchange warehousesfell for a second day to 113,725 tons yesterday, and stockpilesof the metal used in wires and pipes in Shanghai dropped for thefirst week in three to 56,182 tons last week.
Among other LME-traded metals, aluminum gained 0.7 percentat $3,060 a ton, zinc was up 1.6 percent at $2,255 a ton, leadrose 1.3 percent to $2,805, nickel was 1 percent higher at$28,725, and tin added 1.4 percent to $21,950 a ton as of 5:50p.m. in Singapore.
To contact the reporters for this story:Glenys Sim in Singapore atgsim4@bloomberg.net
Last Updated: April 22, 2008 05:55 EDT