copper prices edge lower in shanghai on chile wage

Copper Prices Edge Lower in Shanghai on Chile Wage Agreements

By Xiaowei Li

Dec. 20 (Bloomberg) -- Copper futures in Shanghai wiped out the previous day's gains and traded lower after Chilean producers Codelco and Xstrata reached wage agreements with unions, reducing the risk of output disruptions.

Codelco, the world's biggest copper producer, settled yesterday with two unions at Chile's Chuquicamata copper mine, while a union at Xstrata Plc's Altonorte smelter in Chile agreed to end a strike in its second day that had halted production.

``The wage talks results from Chilean producers are likely to ensure supplies for next year,'' said Wu Bowen, a trader at Shanghai Jinpeng Futures Co., today.

Copper for delivery in February on the Shanghai Futures Exchange fell as much as 260 yuan, or 0.4 percent, to 62,650 yuan ($8,012) a metric ton, compared with the four-week low of 62,500 reached on Dec. 18. It traded at 62,750 yuan at the market's midday break.

Metal for immediate delivery in Changjiang, Shanghai's biggest spot market, fell as much as 520 yuan, or 0.8 percent, to 64,480 yuan a ton today.

Copper for delivery in three months on the London Metal Exchange gained $31, or 0.5 percent, to $6,676 at 12:03 p.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 Dec 18. Stockpiles of the metal have more than doubled in the past year.

The strike at the Altonorte smelter, Chile's third-largest, occurred Dec. 18 after negotiators failed to reach an accord on wages.

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