Copper Rises to 28-Month High as Chilean Strike May Curb Output
Nov. 5 (Bloomberg) -- Copper prices rose to a 28-month high after workers went on strike at a mine in Chile, the world's largest producer.
The walkout at Collahuasi, the fourth-biggest copper mine, started at 7 a.m. New York time after wage negotiations failed, said Jacqueline Cerda, a union official. Inventories in warehouses monitored by the London Metal Exchange have declined 27 percent this year to the lowest level since October 2009.
"Coming on top of an already tight market, the strike news just adds to the potential for higher prices," said David Thurtell, an analyst at Citigroup Inc. in London.
Copper futures for December delivery advanced 3.65 cents, or 0.9 percent, to close at $3.9485 a pound at 1:27 p.m. on the Comex in New York. Earlier, the price reached $3.9955, the highest level for a most-active contract since July 3, 2008. The metal rose to a record $4.2605 in May 2008.
The Federal Reserve said on Nov. 3 it will purchase an additional $600 billion of Treasuries through June to bolster the U.S. economy, a move that traders said will erode the value of the dollar.
"The ongoing perception that commodities are to be bought as 'hard-asset' hedge against the sinking dollar" supported copper, Edward Meir, an analyst at MF Global Holdings Ltd. in Darien, Connecticut, said in a report.
This week, copper gained 5.8 percent, the most since July 23, while the greenback was down 1 percent against a basket of major currencies.
On the LME, copper for delivery in three months rose $56, or 0.7 percent, to $8,655 a metric ton ($3.93 a pound). The price has gained 33 percent in the past 12 months.
Copper may reach $9,000 should the strike last for a month or two, Citigroup's Thurtell said. Collahuasi, owned by Xstrata Plc and Anglo American Plc, accounted for 3.5 percent of global output last year, according to Standard Bank Plc.
Zinc also gained in London. Lead, nickel, aluminum and tin dropped.
To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net Yi Tian in New York at Ytian8@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net .
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