April 2 (Bloomberg) -- Chilean Mining Minister Santiago Gonzalez, whose country is the world’s largest copper producer, said December’s prices of $1.25 a pound for the metal are ”in the past” as Chinese demand rebounds.

Prices have touched bottom and are making “systematic” gains as the Asian nation, the world’s largest user of the metal, boosts purchases, Gonzalez said yesterday in an interview in Santiago. Copper has rallied 47 percent since reaching a four-year low of $1.255 a pound on Dec. 26.

“China is buying large amounts of copper,” Gonzalez said. “That’s part of copper’s recovery.”

Copper stockpiles in London, which have doubled since October, are also set to decline as China’s 4 trillion-yuan ($585 billion) stimulus package helps spurs demand for the metal, he said. Some copper executives, such as Diego Hernandez, president of BHP Billiton Ltd’s base-metals unit, said the increase in China’s purchases might not last.

London Metal Exchange inventories more than doubled to 499,625 tons since October after the recession cut demand for the metal used in plumbing and wiring. Copper prices have climbed in recent months because of a shortage of scrap that caused China to increase buying, BHP’s Hernandez said.

Copper Rally

Copper rallied 31 percent in the first quarter, the second-best performer after gasoline among 19 raw materials tracked by the RJ/CRB commodity index. Refined copper imports by China, the world’s biggest consumer, will also increase this quarter, Wang Chiwei, vice president of Jiangxi Copper Co., China’s largest producer, said yesterday.

China’s purchases in the first quarter reflect a shortage of scrap copper that prompted the nation to instead buy from mines, Hernandez said. Melbourne-based BHP is the world’s largest mining company.

Copper futures for May delivery yesterday rose 0.45 cent, or 0.2 percent, to $1.849 a pound on the New York Mercantile Exchange’s Comex division, after pending U.S. home sales unexpectedly rose.

Executives from mining companies including BHP, Codelco and Freeport-McMoRan Copper & Gold Inc. have been meeting this week in Santiago at metals conferences.

Demand in the U.S., the second-largest copper consumer, remains “low” because of a “depressed” housing market, Gonzalez said. Codelco Chief Executive Officer Jose Pablo Arellano said yesterday demand may stop weakening amid increased government spending.

‘Very Weak’ Demand

Demand in the U.S., Europe and Japan still is “very weak,” Eduardo Titelman, executive vice president of the Chilean Copper Commission, a state-run research group, said yesterday in an interview in Santiago. Worldwide, copper consumption will drop as much as 20 percent this year, Jon Barnes, an analyst at CRU Group, said in a speech yesterday in Santiago.

“There’s no evidence of things getting better yet,” he said.

China surpassed the U.S. as the world’s largest consumer of copper in 2002 and buys a third of the copper from Chile, Gonzalez said. Chile in turn supplies more than a third of the world’s mined copper, used in wire and pipe.

To contact the reporter on this story: Heather Walsh in Santiago at hlwalsh@bloomberg.net

Last Updated: April 2, 2009 00:01 EDT