CHINA'S voracious appetite for raw materials to feed its rapidly expanding economy has sent commodity prices soaring and pushed up international freight rates to stratospheric levels.

''Chinese demand for commodities is revolutionising global commodities markets,'' said Merrill Lynch Investment Managers in a recent research note.

''China has already overtaken the USA as the largest consumer of iron ore, steel, and copper.''

In the first half of 2003, iron ore exports to the world's most populous country jumped by 45%, and copper shipments rose by 40%.

Demand from China has lifted copper prices to an eight-year high, and nickel to a 14-year high.

China - the world's sixth-largest economy according to Merrill Lynch - imported 30% more oil last year than in 2002, making it the world's second-largest importer of petroleum products after the US.

The vast Communist-ruled nation is sucking in half of the world's supplies of cement, a third of its coal, and more than a third of its steel, said an analyst at Barclays Capital in London.

Prices of tin, zinc, lead, and aluminium - metals used in manufacturing - have all surged in recent months.

Some of the materials that are imported by China are turned into finished goods for export to Western markets.

China sells much of the iron ore it imports after it has processed it into steel. Imported alumina is turned into aluminium sheets and ingots and sold to markets in Asia, North America, and Europe.

China's economy is growing at around 8% a year - more than double that of the UK - and its insatiable appetite for resources is beginning to create supply and demand problems.

Copper and nickel miners simply cannot keep up with the demand for ore.

Some City economists are worried that this shortage of metals and other materials could have a negative impact on global inflation. Central bankers are watching the problem with growing concern.

The red-hot prices for metals are being felt in the UK.

The big gains in the price of metals sold to China has brought fresh enthusiasm to traders at the London Metal Exchange, the world's largest non-ferrous metals exchange. A spokesman for the LME said 2003 was the best year in its 126-year history.

Last year, it posted volumes of 72 million contracts, a 23% rise on the previous year and 8.8% above the previous record set in 2000.

''The growth is reflective of the renewed optimism in the metals industry,'' said Simon Heale, the exchange's chief executive.

During the dot.com boom in the 1990s, when technology stocks were roaring ahead, many investors shunned the metals market, regarding it as a backwater.

All that has changed. China has made commodities such as metals the new dot.com craze.

Investors are piling into mining company stocks, such as Rio Tinto, BHP Billiton, and Xstrata on the main London exchange, and into companies on the junior Alternative Investment Market.

Last year, shares in the

London-listed miner Xstrata doubled in value while BHP Billiton saw its stock rise by 50%. Rio Tinto also posted impressive gains.

Last week, BHP Billiton announced a multi-billion-pound joint venture to supply iron ore to China's booming steel industry, pushing up its stock by 4.1%.

Some share traders talk of a ''wild west'' environment in which speculators will buy anything connected with China.

One of the big winners is Antofagasta, the only pure copper producer listed in London.

Known among traders as ''Fag'', the company has seen its share price double during the past 12 months.

The firm, which operates copper mines in Chile and is listed on the FTSE-250 mid-cap index, is capitalised at more than (pounds) 2.3bn and should win promotion to the market's senior index, the FTSE-100, when Stock Exchange officials revise the blue-chip barometer this week.

Shipping owners and brokers have also cashed in on a record rise in sea freight charges.

The sharp jump in freight costs has spurred demand for ship brokers that match cargoes to carriers.

Shares in UK-based Clarkson, one of the few listed ship brokers, have risen by more than 160% since the start of the year.

A spokesman for 100-year-old shipping broker JE Hyde said business was brisk.

''We have a strong freight market the like of which we have never seen before,'' he said.