[miningmx.com] — Copper hit its highest in more than five weeks on Monday, after a massive earthquake in top producer Chile shut up to one fifth of the country’s output, stoking speculation the metal could revisit a 2010 peak.
Three-month copper on the London Metal Exchange rose 3.5 percent to $7,450 a tonne by 1100 GMT from $7,195 at the close on Friday.
The metal used in power and construction earlier jumped as much as 5.6 percent to $7,600, its highest since Jan. 20. The metal is in line for its biggest one-day increase in two weeks.
“Certainly this will push copper back towards $8,000,” said John Meyer, an analyst at Fairfax in London.
Saturday’s 8.8-magnitude quake and the ensuing tsunamis killed more than 700 people in Chile, wrecked hundreds of thousands of homes and mangled highways and bridges, dealing a heavy blow to one of Latin America’s most stable economies.
“The market should be concerned that the supply for this year could be severely limited by this quake, but I don’t think this earthquake alone is enough to reverse the supply/demand balance,” Meyer said.
“We’ll probably lose about 40,000 tonnes from the earthquake — two weeks of cut-back production,” Meyer added as a preliminary estimate.
Up to a fifth of Chile’s copper mine capacity was initially shut — estimated at around 4.5 million tonnes in concentrate annually — but the top mines slowly resumed operations on Sunday despite limited power supplies.
As the world’s top producer Chile produced more than 5.3 million tonnes of copper in 2008, according to the International Copper Study Group.
The buying sent copper above a technical retracement level around $7,200, opening a path towards the Jan. 7 peak of $7,796 and possibly to $8,000.
Chile’s mining minister Santiago Gonzales said the country’s leading copper producer Codelco had enough stocks to be able to meet its export commitments.
“While it appears copper production in Chile will not be greatly affected by the earthquake, these disruptions add to a chronic underperforming supply-side in the copper mining industry,” Standard Bank said in a note.
News of the quake eclipsed bearish Chinese data showing the pace of manufacturing in the world’s top base metals consumer eased February.
Underscoring some market players’ concerns about Chinese demand softening, stocks of copper at LME warehouses rose 1,525 tonnes to 551,250 tonnes, hovering within reach of their highest level since October 2003.
Aluminium traded at $2,145.25 from $2,133. LME stocks fell 5,275 tonnes to stand just above 4.57 million tonnes, losing grip of recent record highs above 4.6 million tonnes.
Other industrial metals also rallied. Zinc was at $2,240 from $2,195 and battery material lead was at $2,210 from $2,165. Tin traded at $17,175 from $17,125 and nickel was at $21,650 from $21,175.
