LONDON: Copper hit a six-week high on Tuesday as concerns over the potential supply impact of wage negotiations at the world's biggest copper mine helped push prices back above $7,000 a tonne.
The union at BHP's Escondida facility in Chile said on Friday that it had started the latest round of negotiations with a proposal, which includes a bonus of about $34,000 per worker.
Failure to reach a labour deal at the mine during last year's wage talks led to a 44-day strike that resulted in a near 8 percent drop in annual output from Escondida.
ABN Amro analyst Casper Burgering said this year's talks were sharpening investor appetite for copper.
"Negotiations are not that easy, and investors are thinking it will take some time before they get a settlement," he said. "In that case, supply of copper will be hurt.
"Looking at the fundamentals, they are still quite sound," he added. "We have not come across any shortages yet, but I think demand, especially from China, will remain sound... copper has quite a good case for staying above $7,000."
COPPER PRICES: Three-month copper on the London Metal Exchange was up 0.6 percent at $7,014 a tonne at 0945 GMT, after rising to $7,024.50 a tonne, its highest since April 25, earlier in the session.
COPPER SPREADS: The premium of three-month copper over the cash contract has fallen to $1.75, its narrowest since March 2017, signalling near-term tightness in the market.
TECHNICALS: As copper returns to the $7,016 level, a break above a falling trendline confirms a bullish wedge that suggests a higher target around $7,112, Reuters technical analyst Wang Tao said.
TOROMOCHO MINE: China's Chinalco said it had begun a $1.3 billion expansion of its Toromocho mine in Peru, which it said would raise copper output by 45 percent by 2020.
LEAD: LME lead hit a more than three-month high at $2,528 a tonne, tracking a 4 percent rally in Shanghai prices to a 19-month peak after the government in China's northern province of Hebei announced environmental inspections on the acid industry. Lead was later up 0.2 percent at $2,511 a tonne.
ALUMINIUM STOCKS: Aluminium inventories held in London Metal Exchange-registered warehouses fell by another 7,050 tonnes, data showed on Tuesday, taking them to their lowest since early February at 1.192 million tonnes.
ALUMINIUM PRICES: LME aluminium was 0.9 percent higher at $2,335.50 a tonne
OTHER METALS: LME zinc was up 1.4 percent at $3,166.50 a tonne, while nickel was 0.2 percent higher at $15,520 a tonne and tin was up 0.2 percent at $20,610 a tonne.
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