Copper falls on stronger dollar, Chile supply worries cap downside

LONDON: Copper prices edged down on Thursday as a firmer dollar and risk reduction ahead of a long Chinese holiday weekend weighed on sentiment, although worries over supply disruptions at major Chilean mines limited losses.

Benchmark three-month copper on the London Metal Exchange dipped 0.2% to $14,595 a metric ton by 1405 GMT.

Copper, used in power and construction, is up 9% so far this quarter, having hit a record high of $14,875 a ton two weeks ago.

Financial markets in top metals consumer China have closed for the Mid-Autumn Festival. Trading will resume on Monday.

“China is out, but really it’s the macro weight,” said Alastair Munro, senior base metals strategist at Marex.

The dollar held near a two-month high after a sharp rally, fuelled by expectations of additional Federal Reserve interest rate hikes.

A stronger US currency makes dollar-priced metals more expensive for buyers using other currencies, while the prospect of higher borrowing costs affects sentiment towards growth-dependent metals such as copper.

China’s stock markets saw their biggest one-day decline in a month on Thursday, as investors were sceptical that a meeting between US President Donald Trump and Chinese President Xi Jinping in Washington would deliver a broader breakthrough.

Meanwhile, the premium of the LME cash copper contract over the three-month benchmark widened to $107.5 a ton, the highest since September 1, from zero a week ago, signalling tightness for nearby supply.

Adding to supply concerns, operations at BHP’s Escondida mine in Chile, the world’s largest copper mine, were suspended on Wednesday after a worker was killed in an accident.

Separately, two unions representing workers at Antofagasta Minerals’ Centinela copper mine in Chile called on workers to hold a strike vote, adding to concerns amid ongoing contract negotiations with workers at Escondida.

LME zinc rose 0.5% to $3,919 a ton, erasing earlier losses, after Nyrstar said it was launching a strategic review of its loss-making Budel zinc smelting operations in the Netherlands.

LME aluminium slipped 0.3% to $3,247, nickel gave up 0.3%, to $16,440, and lead dipped 0.2% to $1,916 while tin was little changed at $53,920.