SHANGHAI - Copper jumped the most in 11 months in New York after a magnitude-8.8 earthquake disrupted supplies from Chile, the world's largest producer.
Copper for May delivery gained as much as 20.3 cents, or 6.2 percent, to $3.4870 a pound, before trading at $3.3860 at 3 pm Beijing time, in after-hours electronic trading on the Comex division of the New York Mercantile Exchange. That was the largest intraday gain for the most active contract since April. The metal jumped to the highest level in more than five weeks in London and by the limit in Shanghai.
The quake, which hit central Chile on Saturday morning, forced Codelco and Anglo American Plc to halt mine operations. Codelco said it would meet supply contracts with shipments from undamaged plants in Chile's north, where it has bigger mines. Copper represented half of Chile's $53 billion of exports last year.
"The initial reaction to the quake is for copper to shoot up," Xu Liping, an analyst at HNA Topwin Futures Co, said. "The extent of the rally will depend on what additional information emerges and interpretation of the actual supply damage."
Copper up as quake hits output
Copper for three-month delivery on the London Metal Exchange surged as much as 5.6 percent to $7,600 a metric ton, the highest price since Jan 20. The contract traded at $7,460.25 a ton at 3 pm Beijing time. The June-delivery contract on the Shanghai Futures Exchange climbed 5 percent from the previous settlement price to 61,150 yuan ($8,958) a ton, and closed at 60,780 yuan.
'Panic buying'
Chile accounted for almost half of China's record 3.19 million-ton refined copper imports last year and 23 percent of copper concentrate purchases, according to customs data. China is the world's largest consumer of the metal used in construction and automobile manufacturing.
Copper pared gains in London and Shanghai as Codelco said it would reopen its shuttered mines soon, Wang Kang, a Shanghai-based analyst at Citics Futures Co, said.
"The earlier surge in prices was exaggerated by panic buying for concerns yet to be substantiated," Wang said.
Codelco began a "gradual" restart of operations at the El Teniente mine after reconnecting the power supply cut by the quake. Its Andina mine remained closed through Sunday and inspectors didn't find major damage.
Anglo American Plc said its Los Bronces and El Soldado mines stopped operating for the same reason, without giving more details.
Estimated output
The halted Codelco and Anglo mines account for about 16 percent of Chile's output. The South American country's production of the metal climbed 0.7 percent to 5.4 million tons in 2009. Global supply this year is estimated at 18.5 million tons by Barclays Capital.
The Chilean ports of Valparaiso and San Antonio, through which El Teniente ships its copper, remain closed to new ships.
"If the quake didn't really damage mining facilities, transport and shipping may be the real disruptions to supplies that we should be watching for," said HNA's Xu.
Aluminum in London gained 0.4 percent to $2,143 a ton, zinc added 2 percent to $2,239, lead increased 2.5 percent to $2,220 a ton, and nickel rose 1.5 percent to $21,500.
Bloomberg News From China Daily 02/03/2010
CFE Price at posting:
43.5¢ Sentiment: Buy Disclosure: Held
(20min delay)