copper in shanghai rises on supply concern falling

Copper in Shanghai Rises on Supply Concern, Falling Stockpiles

By Xiaowei Li

Dec. 19 (Bloomberg) -- Copper futures in Shanghai rose from a four-week low after a strike at Xstrata Plc's Altonorte smelter in Chile lifted international copper prices and after global stockpiles fell.

The strike at the Altonorte smelter, Chile's third-largest, occurred after negotiators failed to reach an accord on wages, union president Isidro Cabrera said yesterday. On the same day, stockpiles of copper monitored by the London Metal Exchange fell 0.5 percent to 173,250 metric tons.

``The improvement in the international copper market supported Shanghai prices,'' said Tang Yijun, a trader at China International Futures (Shanghai) Co.

Copper for delivery in February on the Shanghai Futures Exchange rose as much as 460 yuan, or 0.7 percent, to 63,240 yuan ($8,083) a metric ton, and traded at 62,990 yuan at the market's midday break.

Metal for immediate delivery in Changjiang, Shanghai's biggest spot market, rose as much as 500 yuan, or 0.8 percent, to 65,000 yuan a ton today.

Copper for delivery in three months on the London Metal Exchange gained $40, or 0.6 percent, to $6,710 at 11:20 a.m. Shanghai time. The contract had fallen as low as $6,618 on Dec. 15, its lowest since June 23 against a background of rising global stockpiles of the metal, used in pipes and wiring.

Copper production in January-September exceeded demand by 81,000 tons, compared with a shortfall of 319,000 tons a year earlier, the International Copper Study Group said yesterday. Stockpiles of the metal have more than doubled in the past year.

The start of the strike at Altonorte halted production yesterday and helped to boost copper prices, which have gained 53 percent this year partly because labor disputes reduced output in Mexico and Chile, the world's largest producer of the metal.

The union at the smelter turned down an improved offer for wages and bonuses, union Treasurer Pedro Ramirez said in a phone interview.

A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.