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Markets

Copper rises on Chilean supply risk as workers go on strike

  • Three-month copper on the London Metal Exchange rose 0.3% to $9,497.50 a tonne by 0614 GMT, up 0.3% on a weekly basis
13 Aug, 2021

London copper prices advanced on Friday, on track for a weekly gain, after workers at two mines in top producer Chile went on strikes, raising supply disruption risks.

Three-month copper on the London Metal Exchange rose 0.3% to $9,497.50 a tonne by 0614 GMT, up 0.3% on a weekly basis.

The most-traded September copper contract on the Shanghai Futures Exchange eased 0.5% to 69,870 yuan ($10,785.74) a tonne.

Chile supply concerns help copper bounce

On Thursday, two unions at Codelco's Andina copper mine walked off the job after rejecting the latest contract offer, while workers at JX Nippon Copper's Caserones mine also went on a strike after labour contract talks collapsed.

"The copper and aluminium markets have been tightened by supply constraints in Chile, Peru and China," said Fitch Solutions in a note.

However, capping further gains in copper prices was news that workers at Chile's sprawling Escondida copper mine, the world's biggest, approved a new contract with management, avoiding a strike.

Slowing demand in China also dented outlook for base metals, but potential supply outages caused by renewed global COVID-19 outbreaks poses an upside risk to the sector, Fitch Solutions said.

FUNDAMENTALS

  • LME aluminium rose 0.1% to $2,584.50 a tonne, while nickel fell 0.6% to $19,555 a tonne.

  • ShFE aluminium eased 0.3% to 20,050 yuan a tonne, nickel increased 1.1% to 146,250 yuan a tonne while zinc fell 1.6% to 22,340 yuan a tonne and tin dropped 1.8% to 237,550 yuan a tonne.

  • Yangshan copper premium rose to $65 a tonne, its highest since March 23, indicating improving demand to import the metal into China.

  • The discount of LME cash copper on the three-month contract expanded to $31.75 a tonne, its biggest since July 20, indicating more nearby supply, as LME copper stocks surged 123% from end-2020 to 235,775 tonnes.

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