copper rises in asia on mexican labor unrest

Copper Rises in Asia on Mexican Labor Unrest; Zinc, Aluminum Up

By Glenys Sim and Li Xiaowei

July 31 (Bloomberg) -- Copper futures in Asia rose after workers at Southern Copper Corp., the world's fifth-largest producer of the metal, began a strike at three of the company's Mexican mines to demand wage increases.

Employees stopped work at Cananea, Mexico's largest copper mine, and the Taxco and San Martin zinc mines, National Mining and Metal Workers Union spokeswoman Carmen Romero said yesterday.

``The strike in Mexico is giving the market a lift,'' Lin Ji Han, an analyst at Ningbo Shanli Futures Co., said today.

Copper for October delivery on the Shanghai Futures Exchange rose as much as 1,560 yuan, or 2.3 percent, to 69,280 yuan ($9,152) a metric ton. The contract ended up 1.8 percent at 68,940 yuan a ton.

Metal for immediate delivery in Changjiang, Shanghai's biggest cash market, rose as much as 1.5 percent to 67,880 yuan a ton today. London Metal Exchange copper for delivery in three months rose 1 percent to $7,910 a ton at 3:20 p.m. in Shanghai.

The premium of the cash contract on the LME over three- month futures rose for a sixth day yesterday to $125 a ton, near a one-year high reached on July 4. The so-called backwardation, where the future price is less expensive than the price for immediate delivery, usually suggests near-term supply shortages.

``The Chinese market is also supported by good levels of physical trading, while the London market is supported by a weaker U.S. dollar,'' said Lin.

Inventories Fall

Copper stockpiles monitored by the Shanghai Futures Exchange fell for a second week by 1,093 tons July 27. Global inventory monitored by the benchmark London Metal Exchange is near a one-year low reached on July 13.

Four-month strikes at Southern Copper's Cananea and La Caridad mines last year cut the company's copper output by 12 percent. The company estimates it will produce 700,000 tons of copper this year.

Meanwhile, contract workers at Codelco, the world's biggest copper producer, will vote today on whether to end a strike in its sixth week.

Zinc in Shanghai for September delivery rose 1 percent to end at 28,700 yuan a ton, while October delivery aluminum closed little changed at 19,660 yuan a ton.

Zinc for delivery in three months on the London Metal Exchange gained 1.9 percent to $3,535 a ton at 4:51 p.m. Shanghai time, while aluminum added 0.2 percent to $2,763 a ton.

Among other LME metals, lead traded up 5.7 percent at $3,080 a ton, nickel gained 3.3 percent to $31,200, while tin advanced to the highest since at least 1989, up 2.2 percent to $16,500 a ton.

To contact the reporters for this story: Glenys Sim in Singapore at [email protected] Li Xiaowei in Shanghai at [email protected]

Last Updated: July 31, 2007 04:59 EDT