LONDON: Copper prices rose to a 10-day high on Thursday, supported by a break above key technical levels and potential supply risks related to a strike at BHP’s Escondida mine, but trading volumes remained low as fund investors stayed on the sideline.
Three-month copper contract on the London Metal Exchange (LME) reached $9,109 per metric ton earlier in the day, breaking both 200-day and 21-day moving averages. It was trading up 1.5% at $9,103 during official rings. “Turnovers for copper and aluminium were significantly lower,” Alastair Munro, senior base metals strategist at Marex, said.
Copper rallied to an all-time high in late May fuelled by speculation, but many funds have retreated and switched to gold and oil from metals, he said. Trading volumes so far this week for copper were at 60,589 lots, compared with 180,788 lots for the week up to May 17. Focus was also on potential disruption to supply in Chile.
Union workers at Escondida, the world’s biggest copper mine, rejected operator BHP’s request to pause their strike. BHP is yet to disclose any estimate on the impact on production. It would take time for the market to factor in any potential significant drop in physical supply from the strike, Munro said.
More copper could be marked as ready to leave LME’s registered warehouses, or “cancelled”, in the coming week, he said, citing a historical linkage between stock cancellations and a tighter spread. “Tom-next”, which is the cost of rolling a short cash position overnight, narrowed notably to $6 a ton to reflect expectations of falling copper availability. LME aluminium rose 0.6% to $2,349 a ton, lead increased 1.5% to $2,038.5, zinc edged up 1.7% to $2,762, tin advanced 1.5% to $31,890 and nickel was up 0.9% at $16,415.
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