LONDON, Dec 30 (Reuters) - Copper climbed to a fresh 16-month high above $7,300 on Wednesday as rising demand expectations for 2010, combined with strike action in Chile, supported prices. By 1136 GMT, copper for three month delivery MCU3 on the London Metal Exchange rose to $7,306.25 a tonne from $7,275 at the close on Tuesday. The metal, used in power and construction, earlier touched $7,380, its highest since Sept. 4, 2008.
"There is ongoing support from indications of an improving outlook in 2010," said John Meyer, analyst at investment bank Fairfax. "Certain metals have been helped by investment demand ... It's been a roller coaster year."
He added that improving U.S. consumer confidence data from Tuesday was also boosting investor sentiment. [ID:nN29186364]
In addition, Chile's Codelco, the world's No. 1 copper producer, was braced for a strike at its giant Chuquicamata mine after workers rejected a wage offer on Tuesday, stoking supply fears on global markets.
A strike could start on Jan. 4 at Chuquicamata, which produces around 4 percent of the world's mined copper, although analysts expect any stoppage to be short lived. [ID:nN29156858]
"Workers voted on Tuesday to strike at Chile's Chuquicamata mine, which produces around 4 percent of the world's copper concentrate," RBC Capital Markets said in a note.
"The Chuquicamata strike vote came just hours after union workers began an indefinite strike at Chile's Altonorte smelter, where owner Xstrata has cut output at the facility for nearly a month for maintenance work." [ID:nN28164971]
But copper prices were little affected by a firmer dollar, which hit a two-month high as it continued to benefit from the view the U.S. economy is on course to recover. [USD/]
A strong U.S. currency makes metals priced in dollars more expensive for holders of other currencies.
A weak dollar has boosted industrial metals this year however, combined with Chinese buying, new investor cash and an improving macro outlook.
Copper is now on course for an annual rises of about 140 percent and set for its biggest annual rise in at least three decades.
The red metal has rallied every quarter this year, its longest run of gains since breaking a run of nine quarterly increases at the end of 2006.
Average quarterly gains for London copper in 2009 were 24 percent, pipping 1987's average of 20 percent.
"It looks like copper's amazing bull run will continue into next year, for a while at least. But there is a lot of speculative froth in these prices and valuations have very little to do with current fundamentals," a dealer in Hong Kong said.
INVENTORIES RISE
Demand worries remain. Copper stocks rose 10,025 tonnes to 495,950 tonnes -- the highest point since early April.
In other metals, aluminium MAL3 traded at $2,271.25 from $2,273 but earlier hit a two-week high at $2,289. LME stocks for the metal, used in transport and packaging, fell 1,800 tonnes but remain near record levels above 4.6 million tonnes.
Steel making ingredient nickel MNI3 traded at $18,875 from $19,200 while battery material lead MPB3 was at $2,432 from $2,449.
Weighing on nickel were LME stocks, which gained 1,038 tonnes to new record levels at 153,936 tonnes.
Zinc MZN3 traded at $2,582.50 a tonne from $2,548 and tin MSN3 was at $16,749 from $16,745.
"Chart indicators and demand expectations should continue to limit substantial price weakness over the next few days while the focus will be firmly on year-end window dressing," BaseMetals.com said in a note.
Metal Prices at 1142 GMT Metal Last Change Pct Move End 2008 Ytd Pct
move COMEX Cu 332.10 2.50 +0.76 139.50 138.06 LME Alum 2265.00 -8.00 -0.35 1535.00 47.56 LME Cu 7305.00 30.00 +0.41 3060.00 138.73 LME Lead 2425.00 -24.00 -0.98 999.00 142.74 LME Nickel 18825.00 -375.00 -1.95 11700.00 60.90 LME Tin 16675.00 -70.00 -0.42 10700.00 55.84 LME Zinc 2580.00 32.00 +1.26 1208.00 113.58 SHFE Alu 16980.00 0.00 +0.00 11540.00 47.14 SHFE Cu* 58990.00 630.00 +1.08 23840.00 147.44 SHFE Zin 20715.00 375.00 +1.84 10120.00 104.69 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Reporting by Michael Taylor; editing by Anthony Barker)
