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Markets

Chile supply concerns help copper bounce

  • "The potential for disruptions in Chile is creating some jitters, but the dollar is up and China growth is slowing".
10 Aug, 2021

LONDON: Copper bounced on Tuesday as worries about supplies from top producer Chile gathered pace, while concerns about Chinese demand and a firmer dollar tempered optimism for higher prices.

Benchmark copper on the London Metal Exchange traded up 0.7% at $9,435 a tonne in official rings. Prices of the metal used in the power and construction industries fell to $9,369.50 a tonne on Monday, their lowest in 2-1/2 weeks.

"The potential for disruptions in Chile is creating some jitters, but the dollar is up and China growth is slowing," a metals trader said.

Demand doubts and dollar weigh on copper

CHILE: BHP and the workers union at its Escondida copper mine in Chile said late on Monday they would extend government-mediated contract talks by a day in a last-ditch effort to stave off a strike.

Escondida, the world's biggest copper mine, accounts for about 4.5% of global copper supplies estimated at roughly 24 million tonnes this year.

Workers at JX Nippon Copper's Caserones mine in Chile will walk off the job beginning on Tuesday after last-ditch talks over a collective labour contract collapsed. Caserones produced 126,972 tons of copper in 2020.

DATA: Clues to demand prospects for industrial metals will come from Chinese data over the next few days, including total social financing, loans, industrial production and investment.

China accounts for around half of global consumption of industrial metals.

DOLLAR: A higher US-currency makes dollar-priced metals more expensive for holders of other currencies which could subdue demand.

SPREADS: Ample supplies of copper on the LME market are reflected in the discount for the cash over the three-month contract at around $27 a tonne on Tuesday.

Copper drifts as focus turns to US jobs data

Copper stocks in LME registered warehouses at 236,100 tonnes are more than double the level seen in the middle of May.

TECHNICALS: Copper faces strong upside resistance at the 50-day moving average currently at $9,545, and at $9,565 where the 100-day moving average currently sits.

OTHER METALS: Aluminium was up 1.4% at $2,585 a tonne, zinc rose 1.2% to $2,986.5, lead climbed 1.5% to $2,292.5, tin added 1.5% to $35,138 and nickel advanced 0.6% to $18,738.

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