Copper Gains as Strike Enters Fifth Day at Escondida, World's Biggest Mine

Jul. 27 (Bloomberg) –Copper rose the most in more than two weeks on speculation that a strike at the world's biggest mine may worsen a global supply shortage.

A strike at BHP Billiton Ltd.'s Escondida mine entered a fifth day as Chilean labor authorities prepared to mediate talks between union and company officials. The stoppage has cost about 12,000 metric tons in lost output, said Roberto Arriagada, a union director. World consumption is set to exceed production by 377,000 tons this year, the International Copper Study Group has forecast.

The strike "just adds to people's preconceived idea that there is a tightness in supply," Jaspar Crawley, a broker at Triland Metals Ltd., one of the 12 companies on the floor of the London Metal Exchange, said today in a telephone interview.

Copper futures for September delivery gained 7.15 cents, or 1.6 percent, to close at $4.478 a pound at 1:12 p.m. on the Comex in New York, the biggest gain for a most-active contract since July 7.

The metal has gained 39 percent in the past year, reaching a record $4.6575 on Feb. 15, as mining companies struggled to keep pace with rising consumption.

"In addition to the strike, copper is mostly benefiting from a weaker dollar," Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. The weakness in the greenback makes the metal more attractive to "foreign buyers," he said.

The dollar declined against all of its major counterparts, falling to the lowest level since May 5 against a six-currency basket, as U.S. politicians struggled to reach an agreement on raising the nation's debt limit and reducing the deficit.

On the LME, copper for delivery in three months added $165, or 1.7 percent, to $9,820 a metric ton ($4.45 a pound).

Aluminum, lead, nickel, tin and zinc also gained in London.