copper rises to two month high

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Copper Rises to Two-Month High as Strikes Raise Supply Concerns

By Millie Munshi

July 9 (Bloomberg) -- Copper rose to a two-month high in New York after union workers went on strike at a mine in Chile, the world's largest producer of the metal.

The protest will cut output at Dona Ines de Collahuasi, Chile's third-largest copper mine, union treasurer Pedro Diaz said today in a telephone interview. Supply disruptions helped push copper to a record high in May 2006. The price gained 4.2 percent last week.

``A fair amount of the recent price premium has come through because of the strikes,'' Stephen Pope, head of equity research at Cantor Fitzgerald Europe, said in an interview.

Copper futures for September delivery gained 6.3 cents, or 1.8 percent, to $3.6575 a pound at 9:02 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would be the highest since May 9.

Collahuasi, which is controlled by Xstrata Plc and Anglo American Plc, produces 2.6 percent of the world's mined copper. Workers in Latin America are demanding increased wages after higher metal prices boosted mining profits to record levels.

Contract workers at Chile's state-owned Codelco, the world's biggest copper producer, have been on strike since June 25. Miners walked off the job on July 5 at Grupo Mexico SAB, the world's seventh-largest producer of the metal. Workers have also threatened to strike in Peru.

Inventories of copper monitored by the London Metal Exchange dropped for a 10th straight session to 102,075 metric tons, the lowest since Aug. 3. Stockpiles in London have dropped 44 percent this year.

``As soon as you get strikes, you get shortages coming up at the LME warehouses and that will cause concern,'' Pope said.

On the LME, copper gained $120, or 1.5 percent, to $7,980 a ton. The metal has still fallen 10 percent after reaching a record $8,800 a ton on May 11, 2006.

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

To contact the reporter on the story: Millie Munshi in New York at [email protected] .