US copper futures climbed to a two-week high at the open on Thursday as investors bid the market up on concerns that output will take a hit at one of the world's largest copper mines where workers voted to strike, analysts said.
"With London copper stocks so depressed and arguably, a Chinese demand that is going to continue to increase coming into the end of the year, I think the strike definitely has the potential to push this market much higher and dwindle stocks even further," said Zach Oman, futures analyst with Wisdom Financial.
Copper for September delivery rallied 8.10 cents, or 2.4 percent, to $3.4340 a lb. by 10:09 am On the New York Mercantile Exchange's Comex division, near the upper end of its $3.3465-$3.4550 trading band.
Futures volumes stood at 5,469 lots by 9:00 am Workers at Chile's Collahuasi copper mine voted late on Wednesday to go on strike after rejecting a wage deal from management, Union President Herman Fairies told Reuters. The current contract expires on June 30. "The atmosphere is really charged here," said Fairies, adding that 641 of 698 union members voted in favour of the strike.
He said the strike could begin would be July 3, if neither side requests government mediation. The latest a strike could begin would be on July 9. The mine is one of the world's largest producers of copper, with output of some 440,000 tonnes per year in cathodes and concentrates.
"This strike, if it goes ahead, will impact already constrained mine production and exacerbate a shortage of copper raw material feed (concentrate) to the smelters at a time that concentrate stocks are very low and falling," said Robin Bhar, an analyst with investment bank UBS.
London Metal Exchange copper warehouse inventories declined 1,075 tonnes to 116,375 tonnes on Thursday, while Comex stocks fell by 140 short tons to 22,347 tons on Wednesday.
The strike action at Collahuasi was balanced by a decision by workers at Southern Copper Corp's Peruvian operations to suspend their strike for six days to negotiate with the company, a union leader said late on Wednesday.
Meanwhile, operations at Chile's Codelco, the world's biggest copper miner, were returning to normal on Wednesday across its five divisions following protests by subcontracted workers this week, the company said.
In Canada, a strike at Strata Plc's Canadian copper refinery (CCR) in Montreal entered its third week, with talks unlikely until after a national holiday on July 2. Looking ahead, China's demand for spot imported copper is unlikely to rebound before August due to abundant local supplies and weak buying interest, traders and analysts said on Thursday.
Imports of refined metal from the world's top copper consumer are expected to fall to between 95,000 and 110,000 tonnes this month including some imports that were put in bonded warehouses compared with the peak of 202,955 tonnes in March, they predicted. LME copper for delivery in three months last traded at $7,545 a tonne, up $165 from Wednesday's close.