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Copper Prices Surge After Chile Quake

Copper prices hit 5-week highs on Monday, after a massive earthquake in Chile reportedly halted up to 20 percent of the country's output. But analysts are debating the longer-term market impact on the power and construction metal.

Three-month copper futures on the London Metal Exchange rose to $7,365 per tonne (metric ton) in official rings from $7,195 on Friday. The base metal jumped as much as 5.6 percent to $7,600, its highest since Jan. 20, and is in line for its biggest one-day increase in two weeks.

"Certainly this will push copper back towards $8,000," said John Meyer, an analyst at Fairfax in London.

Saturday's 8.8-magnitude quake and the ensuing tsunamis killed more than 700 people in Chile, wrecked hundreds of thousands of homes and mangled highways and bridges, dealing a heavy blow to one of Latin America's most stable economies. (See:Chile, Venezuela & More: LatAm Market Indices in Real Time)

"The market should be concerned that the supply for this year could be severely limited by this quake, but I don't think this earthquake alone is enough to reverse the supply/demand balance," Meyer said.

"We'll probably lose about 40,000 tonnes from the earthquake — two weeks of cut-back production," he said.

Up to 20 percent of Chile's copper mine capacity in Chile was halted. But the top mines slowly resumed operations on Sunday despite limited power supplies.

Securities to Watch:

Freeport McMoRan Copper & Gold

Rui Tinto

iPath Copper ETN

MSCI Chile Index Fund

UBS E-TRACS CMCI Industrial Metals ETN


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