Copper jumped to the highest price in five weeks in London after a magnitude-8.8 earthquake disrupted supplies from Chile, the world's largest producer.
The quake forced Codelco and Anglo American Plc to halt mine operations after power cuts. Codelco, the biggest copper producer, said it will meet supply contracts with shipments from undamaged plants in northern Chile, where it has bigger mines.
"Metals will be quite well supported, given the earthquake," said Daniel Brebner, an analyst at Deutsche Bank AG in London. "The rally might be a bit overdone, as it looks like operations are coming back to normal. Over the next 48 hours, most operations should be back on line."
Copper for three-month delivery rose US$245, or 3.4%, to US$7,440 a metric ton at 9:51 a.m. on the London Metal Exchange. The contract climbed as high as US$7,600, the highest intraday price since Jan. 20. Copper for May delivery gained 2.9% to US$3.3805 a pound on the New York Mercantile Exchange's Comex unit.
All of the six main metals traded on the LME advanced. Copper producer Kazakhmys Plc and other mining companies posted eight of the 10 biggest gains in the U.K. benchmark FTSE 100 Index of shares.
The quake struck central Chile on the morning of Feb. 27. The country is home to copper mines including Escondida, the world's biggest. Chile makes up 36% of global exports of copper ores and concentrate.
"Overall, about a fifth of the country's copper production was suspended at one point this weekend, but with each passing hour, more facilities are resuming production," Edward Meir, an MF Global Ltd. analyst in Darien, Connecticut, said in a report.
Codelco began a "gradual" restart of operations at the 381,000 ton-a-year El Teniente mine on Sunday, while the 219,554 ton-a-year Andina mine may reopen Monday, according to the Santiago-based company. Power to Anglo's Los Bronces and El Soldado mines was "partially restored" Sunday, spokesman Pranill Ramchander said in e-mailed comments.
"Should reports out of Chile continue to show damage to be manageable, both with respect to the mines and the country's logistical infrastructure, we could see a slow erosion of the price gains by the time the U.S. markets open," Mr. Meir said.
State-owned Codelco ruled out declaring force majeure, a contractual clause that allows companies to miss obligations because of circumstances beyond their control. Chile produced 5.4 million tons of copper in 2009. The halted Codelco and Anglo mines account for about 16% of Chilean output.
"The earthquake highlights the risk of having one-third of the world's copper supply coming from one country," Deutsche Bank's Mr. Brebner said.
A report Monday will probably show U.S. manufacturing expanded in February for a seventh month, economists said. The country is the second-largest copper consumer after China.
The Institute for Supply Management's index declined to 58, according to the median estimate of 63 economists surveyed by Bloomberg News, from a January reading of 58.4 that was the highest since August 2004. The figures are due at 3 p.m. London time.
Prices also climbed as bookings to remove copper from warehouses monitored by the LME, or canceled warrants, surged 35% to 26,200 tons, according to a daily exchange inventory report. Bookings have jumped almost tenfold in 2010. Copper stockpiles rose 0.3% to 551,250 tons.
Zinc for three-month delivery on the LME rose 1% to US$2,216 a ton, aluminum gained 0.2% to US$2,138 a ton and nickel advanced 2.2% to US$21,650 a ton. Lead climbed 1.9% to US$2,205 a ton and tin rose 0.3% to US$17,175 a ton.
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