July 12 (Bloomberg) -- Copper futures in Shanghai fell for the first time in six days as supply concerns eased after striking unionists at Placer Dome Inc.'s Zaldivar mine in Chile agreed to return to work.

Workers and the mine's owners agreed to a 38-month labor contract and miners have 48 hours to return to work, Vancouver- based Placer Dome said in a statement. Production at the mine, which accounts for almost 1 percent of global output, will return to full capacity, Placer Dome said.

``Strikes have a short-term impact on prices,'' said Yang Liang, a trader at China Minmetals Nonferrous Metals Co., in Shanghai. ``The impact of the end of this strike won't be great because'' global supply can't meet demand, he said.

Copper for delivery in September fell 10 yuan, or 0.03 percent, to end at 33,230 yuan ($4,015) a metric ton on the Shanghai Futures Exchange. The contract closed 230 yuan, or 0.7 percent, higher yesterday at $33,240 a ton.

The Zaldivar strike, along with a separate dispute at mines in Arizona owned by Grupo Mexico's Asarco Inc., last week helped copper prices to extend a 12-month, 37 percent rally in New York as inventories of the metal dwindled.

Prices rose to a 16-year high last month as demand rose in China, the biggest user of the metal. Copper stored in warehouses monitored by commodity exchanges in London, New York and Shanghai have slumped 42 percent this year to 72,480 tons, according to data compiled by Bloomberg.

Production

High prices are in turn encouraging more output.

Copper production in China, the world's biggest user of the metal, may increase 20 percent this year, outpacing growth in consumption and sending prices lower, Beijing Antaike Information Development Co. said yesterday.

Chinese copper output may rise to 2.45 million tons, from 2.035 million tons last year, Yang Changhua, an analyst with Antaike, said in an interview from Beijing. Antaike is a research unit of the China Nonferrous Metals Industry Association.

Copper rose in New York yesterday amid speculation the strike in Arizona may cause Asarco, the second-biggest U.S. copper producer, to delay or suspend delivery of the metal used in wires and pipes. Some miners have so-called force majeure clauses in contracts to suspend sales because of events beyond the seller's control.

Copper for immediate delivery on Shanghai's Changjiang Nonferrous Metals Spot Market fell as much as 510 yuan, or 1.5 percent, to 34,190 yuan a ton today. The premium paid for copper from Chile rose to 80 yuan from zero yesterday over the front- month on the futures exchange.

Copper futures for September delivery rose as much as 0.40 cent, or 0.3 percent, to $1.5650 a pound in after-hours trading on the Comex division of the New York Mercantile Exchange.

Copper for delivery in three months on the London Metal Exchange traded as much as $11, or 0.3 percent, higher at $3,377 a ton. The contract yesterday fell 0.1 percent to close at $3,366. The metal reached a record $3,435 a ton on June 20.

To contact the reporters on this story: Claire Leow in Singapore at cleow@bloomberg.net

Last Updated: July 12, 2005 03:27 EDT