By Anna Stablum Dec. 31 (Bloomberg) -- Copper rose in London to the highest price in almost 16 months, and headed for the biggest annual gain in more than two decades, on concern that a strike may disrupt supplies from Chile. Workers at Codelco’s Chuquicamata copper mine, the world’s second-largest, plan to begin a strike on Jan. 4 after receiving approval from Chile’s Work Inspectorate, union official Miguel Lopez said yesterday. The country is the world’s biggest copper producer. Prices also climbed as the dollar slid, stoking demand for metals as an alternative investment. “Copper has the best outlook for next year,” said Eliane Tanner, a Credit Suisse Group AG analyst in Zurich. “It is suffering from supply-side constraints.” Copper for three-month delivery gained $72, or 1 percent, to $7,402 a metric ton at 10:23 a.m. on the London Metal Exchange. The contract rose as much as 1.3 percent to $7,423.75, the highest price since Sept. 4, 2008. Copper for March delivery added 0.8 percent to $3.3715 a pound on the New York Mercantile Exchange’s Comex unit. Prices have more than doubled this year, heading for the biggest jump in more than two decades. Copper is up almost fourfold from the end of 1999 in London. Dollar Slumps The U.S. Dollar Index, which measures the greenback’s strength against six currencies, fell as much as 0.7 percent today. It has dropped 4.6 percent this year, making dollar- priced raw materials cheaper for holders of other monies. “The weaker dollar is supporting prices,” said Jesper Dannesboe, a commodity strategist at Societe Generale SA in London. The bank expects copper for immediate delivery to average $7,435 a ton next year, compared with about $5,161 for 2009. Chuquicamata is part of Codelco’s Norte division, which produced almost half of the Santiago-based company’s output of 1.55 million tons in 2008. Worldwide production of copper this year is estimated at 18.1 million tons, according to Barclays Capital. Codelco is the largest producer of the metal. “Strikes in Chile tend to be resolved rather quickly, and there is plenty of copper around,” Dannesboe said. “We expect the strike to be resolved within the next few weeks,” in which case copper may fall back toward $7,100 a ton, he said. Altonorte Strike Further mediated talks between workers at Xstrata Plc’s Altonorte copper smelter in Chile and management broke down on Dec. 29, Abdiel Sepulveda said yesterday. Altonorte employees began a strike on Dec. 28 after failing to agree on a new wage contract. Sepulveda is president of the union that failed to reach an agreement with the company. “Strikes are fueling concerns over supply,” Credit Suisse’s Tanner said. Altonorte can produce 290,000 metric tons of refined copper a year, according to Xstrata’s Web site. Expectations of revived global economic growth helped to lift copper prices this year along with the weaker dollar, according to Tanner. Prices also were helped by record first- half imports into China, the world’s largest consumer. “We definitely think that consumption in China is going to increase,” Societe Generale’s Dannesboe said. “But obviously there was massive restocking this year, and that is not going to be repeated next year, so imports into China will come down.” Copper stockpiles monitored by the LME rose for a 41st day to 502,325 tons, the most since April 8. The streak is the longest since January 1999. Canceled warrants, or metal booked for delivery, jumped to 2,625 tons. Copper stockpiles in Shanghai declined 1 percent to 95,315 tons this week to the lowest in almost three months, said the Shanghai Futures Exchange. Among other LME metals for three-month delivery, zinc advanced to the highest level since March 17 last year and was recently up 1.5 percent at $2,593. Tin gained 0.3 percent to $16,750 a ton, and aluminum rose 1.2 percent to $2,268 a ton. Lead advanced 1.2 percent to $2,440 a ton, and nickel fell 0.8 percent to $18,755 a ton. To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net

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