Copper Gains in Shanghai After Chile Mine Workers Reject Offer

Copper Gains in Shanghai After Chile Mine Workers Reject Offer

August 23, 2006 Filed Under: Mining Services, Mining Stocks  

Copper rose in Shanghai after striking workers at Chile’s Escondida mine, the world’s largest source of the metal, rejected an improved wage offer, increasing investor concern global supply won’t meet demand.

The proposal was voted against yesterday by more than 98 percent of the 1,906 workers who took part, union director Cipriano Zuluaga said by telephone from Antofagasta, Chile. The price of copper, used in wires and pipes, has more than doubled in the past year as demand soared in China.

“Short-term speculators will continue to push up the copper prices as long as the strike at Escondida remains unresolved,”, Wang Zheng, a metal analyst at Dalu Futures Co., said by phone from Shanghai.

Copper for October delivery on the Shanghai Futures Exchange gained as much as 1,560 yuan, or 2.3 percent, to 68,240 yuan ($8,565) a metric ton. The metal closed the morning session at 68,170 yuan.

Melbourne-based BHP Billiton Ltd., the world’s largest mining company, is offering more pay and higher bonuses. BHP, which owns 57.5 percent of Escondida, has said the strike has cut capacity to 40 to 60 percent of normal. Mine managers said Aug. 16 the dispute was costing owners including BHP, Rio Tinto Group and Mitsubishi Corp. $16 million in lost profit daily.

Metal for three-month delivery gained as much as $20, or 0.3 percent, to $7,670 a ton on the London Metal Exchange, and traded at $7,660 at 12:51 p.m. Shanghai time.

“There’ll be resistance for the London benchmark copper contract to reach $8,000,” Wang said. “How much copper can rally depends on whether the supply disruption is prolonged,” Wang said. The strike began Aug. 7.

Metal for delivery in December fell 40 cents, or 0.1 percent, to $3.4855 a pound in after-hours trade on the Comex division of the New York Mercantile Exchange at 12:53 p.m. Shanghai time.

Copper for cash delivery in Changjiang, Shanghai’s biggest spot market, rose as much as 2.3 percent to 68,600 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.

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