Copper prices rose almost 1 percent on Monday after workers rejected the latest offer to go back to work at the giant Escondida copper mine in Chile. Copper for delivery in three months on the London Metal Exchange fetched $7,520/$7,570 a tonne, up $70.
The contract, which hit an all-time high of $8,800 a tonne in May, was set in decline on Monday following news that the workers and management had agreed to talk and that partial operations had resumed.
But prices rebounded after the workers rejected a sweetened wage and benefits deal in a surprise show of hands, sending the strike into its third week. "Escondida's labour situation is driving the copper market right now," a trader said.
Copper leapt 2 percent on Friday after the mine's operators fully shut down operations that had been operating at about half-steam in response to union roadblocks, which majority owner BHP Billion Ltd/Plc. labelled as "illegal."
But workers were presented on Sunday with the new offer, which led to a partial resumption of production.
"Operations are running at between 40 and 60 percent of capacity," a BHP Billion spokeswoman in Australia said on Monday, minutes before the latest offer was rejected.
Escondida also part-owned by Rio Tinto Ltd/Plc., supplies 8 percent of global copper output. "Copper belongs to Chile, not to the foreigners," workers chanted late on Sunday after singing Chile's national anthem and rejecting the company offer in a show of hands. The strike has generated debate in Chile about fair wages as profit soar for copper miners.
Broker Credit Suisse estimated the strike was costing BHP Billion about $16 million a day in profits. The mine accounts for more than a fifth of the copper produced in Chile, the world's largest source of the metal. Analysts expect BHP Billion to post a record annual profit of more than $10 billion when it reports its fiscal 2006 financial performance on August 23.
Rio Tinto is tipped to turn in a calendar 2006 net profit of $7.6 billion. On the Shanghai Futures Exchange, the most active October copper future was up 230 yuan at 67,060 yuan ($8,409) a tonne. Three-month nickel was slightly softer at $27,800/$28,000 a tonne versus $28,000 at the last LME close. Nickel prices are up on bets by investors that supplies of the metal, whose widest use is as an alloy in stainless steel used to make beer kegs, will fall short of demand over the next year or two.
This outlook was underscored by LME cash metal prices, which carried a premium of $4,000/5,000 a tonne above three-month metal. The premium has widened as stocks have fallen. On Friday, LME-monitored nickel stocks rose 36 tonnes to 6,156, but the amount of nickel available to the market dropped to 870 tonnes, with the rest already earmarked for delivery. Global consumption is around 3,600 tonnes a day.
Three-month aluminium shed $12 to $2,463/$2,473 a tonne. The most active November Shanghai aluminium futures contract was up 40 yuan at 18,470 yuan a tonne. Three-month lead dropped $6 to $1,179/$1,189 a tonne. Three-month zinc was up $10 at $3,270/$3,320 a tonne, while three-month tin dropped $75 to $8,375/$845.
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