Copper rises as strike fears and Chinese data reassure bulls

LONDON: Copper prices rose on Thursday, helped by the threat of strikes at mines in top producer Chile and an easing of fears that China, the biggest consumer, will tighten monetary policy.

Benchmark copper on the London Metal Exchange (LME) was up 0.7% at $10,048.50 a tonne in official trading.

Prices of the metal used in power and construction surged to a record high of $10,747.50 this month before slipping to $9,795 on Monday.

Helping puncture the rally were threats by Chinese authorities to restrain commodity prices, but their effect has faded and strong demand and tight supply underpin prices, according to Saxo Bank analyst Ole Hansen.

"Copper managed to correct 9% from the peak. That's a shallow correction. The underlying strength is there," he said, adding that prices were likely to rise further later in the year.

CHILE: Miner BHP Group Ltd said it would take contingency measures after a labour union at its Escondida and Spence mines called for a strike. Escondida is the world's largest copper mine.

RISK: Investors are concerned that political change in Chile and Peru will lead to tougher rules on mining.

CHINA: Earnings at China's industrial firms grew at a slower pace in April. The data calmed worries over policy tightening and helped lift Chinese stock markets to three-month highs.

YUAN: China's currency has rallied to its strongest against the dollar since 2018, making dollar-priced metals cheaper for Chinese buyers and supporting demand.

POSITIONING: Speculators have curbed bets on higher copper prices, said brokers Marex Spectron. "We are of the increasing opinion that the lows are in place for now," they said.

INFLATION: US inflation data on Friday could affect markets, with investors jittery about price rises and central bank moves to contain them.

INFRASTRUCTURE: US Senate Republicans are expected to unveil a new offer that would spend about $1 trillion on roads, bridges and broadband systems.

OTHER METALS: LME aluminium was up 0.8% at $2,421 a tonne, zinc rose 1.5% to $3,013, nickel added 0.7% to $17,410, lead gained 0.1% to $2,178 and tin was 0.5% higher at $29,657.