Less than a month ago, market analysts were saying that suspected stockpiling by speculators and a perceived world surplus could cause copper prices to crash to less than $1 pound.

The 8.8-magnitude earthquake the struck Chile last Saturday has thrown the market into turmoil, analysts said, with little certainty about the levels of supplies in the immediate future. If the stories about copper stockpiling were true, the market is in for a prolonged period of manipulation and profiteering while it awaits recovery of Chilean production.

Most of the Chilean copper production is located in the north, which was largely unaffected by the 8.8 earthquake, leading analysts to believe the price spike was a psychological response rather than a true reflection of market conditions.

Codelco, Chile's state-owned copper mining company, reassured markets production had resumed at its El Teniente mining complex and normal operations could be restored at the company's Andina complex.

Most of the damage at the operations was due to power outages, said the company.

British mining giant Anglo American also said it expected to resume normal operations at its four mining hubs in Chile.

Market analysts said traders were not in a hurry to return to normal transactions while news from Chile still spoke of massive disruptions caused by the earthquake and subsequent collapse of utility supplies.

At least one-fifth of Chile's copper production was directly affected, industry sources said.

In the New York market, May copper surged more than 6 percent to $3.487 a pound early Monday, before easing to $3.343 a pound.

On the London Metal Exchange, prices of copper futures hit $7,600 a ton, the highest since Jan. 20. Trade was more than double a typical day's volume, more than 5,000 lots recorded during Asian trading hours.

Analysts said they expected copper prices to hit $8,000 a ton before long, mainly in response to short-term panic. However, they said, many traders hoped the trend could be prolonged.

Some effect of the panic has already been reflected on prices of other commodities, including oil, which rose during Monday's trading.

Commodity traders across the board expect the effect of the spike to be longer than anticipated, partly because of ambiguities in the global statistics for copper supply and demand and levels of stockpiles.

While some traders estimate Chinese inventories may be in excess of 3 million tons other traders, including regular China watchers, believe the inventory may be lower and therefore keep prices inflated for some time.

China's consumption of copper in 2009, most of it used in goods exported to the rest of the world, totaled about 5 million tons. Amid predictions that China's gross domestic product in 2010 may surpass 9 percent -- from 8.5 percent in 2009 -- demand for copper in that country alone may remain constant.

Industrial growth in India, recovery in Europe and industrial expansion in South America are also likely to boost demand for copper, analysts said.

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