Copper Rises to 3-Week High on Supply Concern After Chile Quake

Apr 02, 2014 3:42 am ET

April 2 (Bloomberg) -- Copper climbed for a second day to a three-week high on concern that an earthquake off the northern coast of Chile may disrupt supplies from the world’s biggest producer.

The contract for delivery in three months on the London Metal Exchange added as much as 1 percent to $6,728.75 a metric ton, the highest intraday level since March 10, and was at $6,690 at 4:16 p.m. in Tokyo. Today’s gain pares the metal’s loss this year to 9.1 percent.

Northern Chile was shaken by an earthquake last night that killed five people and forced the evacuation of coastal areas. Codelco, the world’s largest producer, said its mines located in the Antofagasta region further south were unaffected. Pan Pacific Copper Co., Japan’s biggest producer, said there was no damage at its Caserones mine.

“Chile is the world’s biggest producer of copper, so there’s typically a knee-jerk price response whenever there’s a weather-related event on a significant scale that could potentially impact production,” said Gavin Wendt, the founder and senior resource analyst at Mine Life Pty in Sydney.

Teck Resources Ltd. said its Quebrada Blanca copper mine was unaffected. The mine neighbors the larger Collahuasi copper pit, which was undamaged by the tremor, labor union official Cristian Arancibia told Radio Cooperativa. Workers at the mine were evacuated after the quake, he said.

“The earthquake news fueled concern that production in the country may be disrupted,” said Chae Un Soo, a metals trader at Korea Exchange Bank Futures Co. in Seoul. “Investors are now looking for more reports from mining companies there.”

The Comex contract for delivery in May added 0.6 percent to $3.052 a pound in New York. In Shanghai, futures for delivery in June advanced 0.1 percent to close at 46,790 yuan ($7,541) a ton.

On the LME, aluminum, zinc, nickel, lead and tin also climbed.