why so cheap compared to rio it , page-34

copper & aluminium prices keep rising Copper in Shanghai Rises to Record as Processors Buy Before Lunar New Year
Jan. 11 (Bloomberg) --

Copper futures in Shanghai rose to a record on demand from cable and wire makers who are increasing stockpiles before the Lunar New Year and on speculation a strike in Chile may worsen a shortfall in global supplies.

Processors in China, the world's biggest consumer of the metal, need copper to maintain operations during a week-long holiday to mark the Lunar New Year which starts Jan. 28. They reduced purchases in the last two months because they had expected the government to sell more from its inventories, said analysts such as Wang Zheng.

``The key is the Lunar New Year holiday,'' said Wang, metal analyst at Shanghai Dalu Futures Co. ``There are fewer trading days on the futures exchange and processors need copper to operate during the holiday.''

Copper prices in London, New York and Shanghai have reached records as global demand outpaces supply. Production has been disrupted by a range of events from strikes in North America to an earthquake in Chile last year. Copper futures in Shanghai have risen 54 percent in the last year.

Copper for delivery in March rose as much as 390 yuan, or 0.9 percent, to 44,010 yuan ($5,456) a metric ton on the Shanghai Futures Exchange. It traded at 43,870 yuan at 11:29 a.m. local time. The exchange will be closed from Jan. 30 to Feb. 3 for the holiday.

The State Reserve Bureau, China's stockpiling agency, sold 51,160 tons of metal at auction in November and December. The sales, part of a plan to reduce prices and raise funds to help settle losing bets by government trader Liu Qibing, were less than some analysts expected.

Codelco

A strike at Chile's Codelco, the world's biggest copper producer, is starting to hurt operations, protest leaders said.

Company spokesman Jorge Sanhueza said the strike hasn't affected production and 50 to 60 percent of workers employed by Codelco's contractors to provide maintenance and services at its El Teniente mine were at their posts yesterday, the most since the strike began Jan. 4.

``If the strike is out, we'll see some knee-jerk selling,'' Robert Barham, a trader at IFX Markets Ltd., in London, said yesterday.

Codelco owns about a fifth of the world's copper reserves. The company's production last year was about 1.7 million tons, according to Codelco estimates made in October.

Copper for delivery in three months was bid at $4,586 and offered at $4,591 a ton on the London Metal Exchange at 11:30 a.m. Shanghai time. It fell $4 to close at $4,575 a ton yesterday, after reaching a record $4,630 earlier in the day.

Copper for delivery in March rose 0.25 cent, or 0.1 percent, to $2.1095 a pound on the Comex division of the New York Mercantile Exchange in after-hours trade.

Aluminum

Aluminum futures in Shanghai rose for the fifth day in six, boosted by production and capacity cuts at 17 Chinese smelters, Shanghai Dalu's Wang said.

The smelters announced cuts amounting to 335,000 tons annually as part of a plan to rein in excessive expansion in the sector and cool raw material prices, the China Nonferrous Metals Industry Association said yesterday.

This is the implementation of the first phase of a plan by 23 smelters agreed late last year to cut output by 10 percent to reduce demand for the raw material alumina and damp prices.

Aluminum for delivery in March rose as much as 200 yuan, or 1 percent, to 19,810 yuan ($2,455) a ton in Shanghai. It traded at 19,680 yuan at 11:30 a.m. local time.