Nov. 9 (Bloomberg) -- Codelco will increase the sale surcharge on copper for clients in Japan and South Korea by as much as 16 percent, the first gain since 2007, reflecting strong demand from China, the world’s largest consumer.

The premium will be $75 a metric ton next year for Japan compared with $65 this year and $74 for South Korea versus $64, according to a copy of the notice received by Bloomberg News. The fees are added to immediate-delivery prices in London to reflect supply and demand and cover shipping and insurance costs.

Copper, used in pipes and power cables, has more than doubled in London this year as China’s 4 trillion yuan ($586 billion) stimulus spending and state stockpiling boosted imports to a record. The move by Santiago, Chile-based Codelco sets a benchmark for other producers and may spur Freeport-McMoRan Copper & Gold Inc. and Pan Pacific Copper Co. to follow suit.

“The increase in copper premiums reflects strong demand in China,” said Dirk Kotze, a Beijing-based strategist at research body CRU International Ltd. “Driven by government stimulus spending, copper demand will continue to rise next year.”

The fees for Chinese buyers would likely be about the same as charges for Japan and South Korea, or perhaps only slightly different, Gu Liangmin, general manager of the copper department at China Minmetals Nonferrous Metals Co., said Nov. 7. The 2009 premium was $72 to $75. Chinese and Codelco executives are slated to meet in mid-November to discuss the fees, Gu said.

Smaller Gain Expected

Codelco won’t comment on surcharges until it has finished its sales campaign for this year, which won’t be until the end of this month, according to a company spokeswoman who declined to be identified in accordance with internal rules.

The company’s premium charged to buyers in Europe will remain unchanged next year at $80 a ton, a person with knowledge of the situation said in September.

Codelco’s decision to leave European prices on hold because of the sluggish regional economy led analysts to expect a gain in Asian premiums of between 5 and 10 percent, according to Robin Bhar, a metals analyst at Calyon in London. The larger- than-expected gain may help copper rise by $20 to $30, he said.

“This is not unexpected but it’s a positive sign for copper,” he said. “The big story this year has been the huge rebound in the copper price and that has been largely because of very healthy Chinese demand. The increase in copper premiums is due to that one thing: China.”

Copper Advances

Three-month delivery copper on the London Metal Exchange reached $6,732 a ton on Oct. 26, the highest since September 2008. The metal gained as much as 1.6 percent today to $6,594 a metric ton before trading at 6,573 a ton at 12:47 p.m. Singapore.

The company, owned by the Chilean government, last year cut the 2009 surcharge for sales to Asia by more than 30 percent to the lowest level since 2003 as the global credit crunch following the collapse of Lehman Brothers Holdings Inc. pushed the world into recession.

Southern Copper Corp., the largest producer in Peru and Mexico, forecast this month that prices may rise to $4 a pound next year because of recovering economic growth in the U.S. and Europe and a lack of new supply. The December-delivery contract on the Comex division of the New York Mercantile Exchange traded at $2.9860 a pound today.

“By next year, the American economy and most of Europe will have recovered from the crisis and consumption will be up,” Southern Copper Chief Executive Officer Oscar Gonzalez Rocha said Nov. 3 in an interview in Lima. “Nor will there be many mines coming online in that timeframe,” he said.

China’s copper imports more than doubled in the first nine months to 2.6 million tons, according to customs data.

To contact the reporter for this story: Jae Hur in Tokyo at jhur1@bloomberg.net or Sebastian Boyd in Santiago at of sboyd9@bloomberg.net

Last Updated: November 8, 2009 23:48 EST