* Copper seen up on Monday; risk premium after Chile quake * Supply uncertainty to remain supportive in days ahead By Nick Trevethan SINGAPORE, Feb 28 (Reuters) - Copper prices are expected to
rise when trading gets under way on Monday, lifted by supply
uncertainty in the wake of the deadly 8.8 magnitude earthquake
in Chile, traders and analysts said Sunday. The earthquake, one of the world's most powerful in a
century battered Chile, the world's biggest copper miner,
killing more than 300 people as it toppled buildings and
triggered tsunamis that ravaged a port town and prompted
tsunami warnings around the Pacific basin. [ID:nLDE61Q02] For a graphic showing the location of the earthquake,
click:
here The quake forced the suspension of up to a fifth of Chile's
mine capacity -- estimated at around 4.5 million tonnes of
copper in concentrate annually -- and even though government
officials said exports would continue unhindered, market
watchers said prices would rise when trading started on Monday. "Copper's sensitivity to Chile is analogous to oil's
sensitivity to tensions in the Middle East. Copper is already a
tightening market and this could accentuate that story," ANZ's
senior commodity analyst Mark Pervan said. "And even if the mines themselves haven't been directly
affected, there is a whole lot of infrastructure running
through the whole thing -- roads, rail and hydropower that
could have been damaged." State miner Codelco halted operations at its El Teniente
and Andina mines, and Mining Minister Santiago Gonzalez said it
could take two days for production to resume. He also said
production at the Caletones smelter had halted. Other Codelco operations were unaffected. Gonzalez added Codelco had enough stocks to be able to meet
its export commitments, and a union leader said the key copper
ports of Antofagasta and Mejillones were operating normally,
although the smaller copper port of San Antonio was closed. Anglo-American's (AAL.L: Quote, Profile, Research) Los Bronces and El Soldado mines,
which together produce about 280,000 tonnes of copper annually,
also halted operations, but other major mines were running as
usual. For a factbox on Chile copper mines, click on
[ID:nN27183634] "The situation is still in flux and I don't want to call
the market 24 hours before it opens. but there is a great deal
of uncertainty about the conditions in Chile, and that
typically results in higher prices," a dealer in Singapore
said. "The government has said shipments will continue normally
but people will try to stock up on metal -- the 30,000 tonnes
that landed in Shanghai warehouses in the past two weeks will
probably find eager buyers -- and we may also see some
tightening in London Metal Exchange spreads." The benchmark LME three-month copper contract CMCU3
closed on Friday at $7,195 a tonne, having rallied 2.8 percent
on the day. Traders said prices could rally by a similar amount
on Monday. "(This) means copper up to $7,400 Monday," another
Singapore trader said. Copper stocks in warehouses monitored by the Shanghai
Futures Exchange jumped 28 percent to almost 150,000 tonnes in
the past two weeks and had looked like a potential drag on the
market, but following the quake, Chinese merchants and
consumers were likely to pick up the metal to ensure supply. "The kneejerk will be to cover. The Chinese are starting to
get into full swing after the holidays," Jonathan Barratt,
managing director of Commodity Broking Services, said. "We have seen a steep correction in the past two weeks, but
the market closed well bid and people will start to build in a
risk premium early on Monday. That will remain for as long
uncertainty exists and things like assessing the impact on fuel
supplies and so on will take some time." Copper prices surged
140 percent last year after a huge sell-off in 2008, but are
down around 36 percent so far this year. Many of the more distant mines rely on diesel to power
generators to provide electricity and disruption to supply --
either due to problems at the nations oil refineries, near the
epicentre of the quake, or because the fuel is diverted to help
with the relief effort -- could have implications for output. State oil company ENAP said diesel imports were being
stepped up to ensure there were no shortages. ENAP general manager Rodrigo Azocar said the refineries had
energy supply problems and structural damage that "had together
forced production to be paralyzed". He added that the company had sufficient gasoline stocks to
last for two weeks and enough diesel for 10 days.
(Additional reporting by Alonso Soto in Santiago; Editing by
Alex Richardson)
Source:in.reuters.com/
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