Mining Profits...Investing In Industrial Metals

Copper futures in Shanghai rose as hedge and investment funds increased buying base metals amid concern supply for copper may not meet demand. Aluminum surged.

Codelco, the world's largest copper producer, said Oct. 11 demand for the metal used in wires and pipes is strong and inventories are low. The metal jumped 5.1 percent in London yesterday, nickel rose to the highest in at least 19 years and tin rose to the most in at least 17 years.

``Copper is surging on both the supply and the funds perspective,'' Li Xun, a trader at Shanghai Continent Futures Co, said today. ``Funds are returning to base metals, pushing up other metals, notably tin and nickel.''

Copper for December delivery surged 2,420 yuan, or 3.5 percent, to settle at 72,270 yuan ($9,139) a metric ton on the Shanghai Futures Exchange. The contract rose by as much as 3.9 percent, hitting the price movement limit of 4 percent.

Copper for immediate delivery in Changjiang, Shanghai's biggest spot copper market, advanced as much as 1,650 yuan, or 2.3 percent, to 72,500 yuan a ton.

Output of copper from mines has lagged behind growth in demand, bolstering prices that climbed to a record this year, Jose Pablo Arellano, executive president of Codelco, the world's largest copper producer, said last week.

Codelco, owned by Chile's government, may produce less than its June forecast for 1.7 million metric tons after a rockslide in July at its largest mine, Arellano said. The company last year produced 11 percent of the copper from mines worldwide.

In addition, the company will start contract talks next month with workers at Codelco Norte, the company's largest division, chairwoman of Codelco Poniachik said last week.

``Supply of copper remains vulnerable to Codelco's coming contract talks, which we are closely following,'' said Li.

Metal for three-month delivery on the London Metal Exchange rose $17, or 0.2 percent, to trade at $7,785 at 3:28 p.m. Shanghai time.