Copper rallies on mine supply fears, China's return from holiday
- Benchmark three-month copper on the London Metal Exchange was up 0.96% at $14,614.5 a metric ton
Copper prices gained due to expectations of Chinese restocking after holidays and increasing supply concerns from major mines, including potential strikes in Chile.
- Chinese restocking expectations post-holiday.
- Supply concerns from Chilean copper mines.
- LME copper market backwardation.
SINGAPORE: Copper prices gained on Thursday, supported by expectations of Chinese restocking after the National Day holiday and concerns about supply from key mines.
Benchmark three-month copper on the London Metal Exchange was up 0.96% at $14,614.5 a metric ton by 0300 GMT.
Earlier, it touched $14,646.5 a ton, its highest in nearly two weeks.
The most-traded copper contract on the Shanghai Futures Exchange rose 1.41% to 111,120 yuan ($16,577.40) a ton.
The rally was driven by expectations that Chinese buyers could restock following the week-long holiday amid low stocks and mounting supply risks, CRU principal analyst Craig Lang said.
Supply concerns intensified after workers at Chile’s Centinela copper mine launched a strike on Wednesday following the breakdown of talks between two unions and Antofagasta Minerals.
Last week, supervisors at BHP’s Escondida copper mine, the world’s largest, rejected a collective contract offer, paving the way for a potential strike there as well.
The supply disruptions have added to concerns over tightening availability outside the US, where traders have been drawing copper from overseas warehouses ahead of a potential tariff on refined copper imports.
The LME cash-to-three-month copper spread widened to an $89.06 backwardation on Wednesday, signalling concerns about near-term availability.
LME zinc was up 1.22%, also amid a burst of trading in the morning.
The cash-to-three-month spread was $47.71 in backwardation on Tuesday. LME aluminium climbed 0.51%, regaining some of the previous day’s losses.
The SHFE price fell 1.17%, weighed down by a recovery in Middle Eastern production and rising shipments from Indonesia.
Improving supply prospects were also reflected by some Japanese aluminium buyers agreeing to pay a premium 35% lower than in the third quarter, sources said on Wednesday.
Among other LME metals, lead added 0.18%, nickel dipped 0.06% and tin added 0.48%.
On the SHFE, zinc lost 0.62%, lead ticked 0.06% higher, nickel dropped 1.63% and tin gained 0.96%.