Copper at 5-week top after Chile earthquake

By Rebekah Curtis

LONDON (BestGrowthStock) – Copper hit its highest in more than five weeks on Monday, after a massive earthquake in top producer Chile closed up to one fifth of the country’s output, stoking speculation the metal could revisit a 2010 peak.

Three-month copper on the London Metal Exchange rose to $7,365 a ton in official rings from $7,195 on Friday.

The metal used in power and construction earlier jumped as much as 5.6 percent to $7,600, its highest since January 20, and is in line for its biggest one-day increase in two weeks.

“Certainly this will push copper back toward $8,000,” said John Meyer, an analyst at Fairfax in London.

Saturday’s 8.8-magnitude quake and the ensuing tsunamis killed more than 700 people in Chile, wrecked hundreds of thousands of homes and mangled highways and bridges, dealing a heavy blow to one of Latin America’s most stable economies.

“The market should be concerned that the supply for this year could be severely limited by this quake, but I don’t think this earthquake alone is enough to reverse the supply/demand balance,” Meyer said.

“We’ll probably lose about 40,000 tons from the earthquake — two weeks of cut-back production,” Meyer added as a preliminary estimate.

Up to a fifth of copper mine capacity in Chile — which produced more than 5 million tons of copper last year — was initially shut. But the top mines slowly resumed operations on Sunday despite limited power supplies.

To see a map locating Chile’s major copper mines and the quake epicenter, see:

http://graphics.thomsonreuters.com/RNGS/2010/MAR/CHILE5.jpg

Anglo American (AAL.L: ) said on Monday it restarted operations at Los Bronces and El Soldado copper mines, but said energy supply was still unstable.

The buying sent copper above a technical retracement level around $7,200, opening a path toward the January 7 peak of $7,796 and possibly to $8,000.

Chile’s mining minister Santiago Gonzales said the country’s leading copper producer Codelco had enough stocks to meet its export commitments.

As the world’s top producer, Chile produced more than 5.3 million tons of copper in 2008, according to the International Copper Study Group.

“While it appears copper production in Chile will not be greatly affected by the earthquake, these disruptions add to a chronic underperforming supply-side in the copper mining industry,” Standard Bank said in a note.

News of the quake eclipsed bearish Chinese data showing the pace of manufacturing in the world’s top base metals consumer eased in February.

Underscoring some market players’ concerns about Chinese demand softening, stocks of copper at LME warehouses rose 1,525 tons to 551,250 tons, hovering within reach of their highest level since October 2003.

Aluminum traded at $2,132 from $2,133. LME stocks fell 5,275 tons to stand just above 4.57 million tons, slipping away from recent record highs above 4.6 million tons.

Other industrial metals also rallied. Zinc was at $2,200 from $2,195 and battery material lead was quoted at $2,170.5/2,171 from $2,165. Tin traded at $17,150 from $17,125. Nickel was at $21,445 from $21,175.

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(Additional reporting by Jan Harvey in London, Manolo Serapio Jr in Manila, Nick Trevethan in Singapore and Humeyra Pamuk in Cairo; editing by Amanda Cooper)

Copper at 5-week top after Chile earthquake