Labour disputes are spooking global metals markets and sending metals and mining shares on a roller-coaster ride, but analysts see the disruption as short term and are more concerned about global economic growth.
Labour talks at plants in Chile, the United States and Canada come on top of dwindling stocks and tight supplies after years of under-investment due to lower metals prices, creating more volatility during the traditionally slow summer season.
"Those things (the labour disputes) are (for) short-term speculation," said Jim Lennon, executive director of Macquarie Bank 's commodities and mining research.
"What we are facing with the market is two opposing forces - inventory levels are moving lower, which is obviously very positive," Lennon said. "But economic growth momentum is turning down and that historically tells you we are near the peak of an absolute cycle."
Lennon said reported world stocks for copper have fallen by about 600,000 tonnes in the first six months of this year, aluminium by over 500,000 tonnes, lead by 100,000 tonnes, tin by 9,000 tonnes, nickel by 4,000 tonnes and zinc by about 70,000 tonnes.
Copper, lead and nickel stocks are near critical level, leaving them vulnerable to any supply disruption or any further stocks decline.
"Our estimate at the end of June is copper stocks, in terms of weeks for total world demand, just have three weeks," Lennon said.
On Thursday, copper prices briefly plunged about $60 a tonne, or 2.2 percent, after a strike was averted at the Collahuasi mine in Chile, jointly controlled by Falconbridge Ltd and Anglo-American Plc following a labour settlement.
The copper market has been on edge as supply disruptions loomed in Chile and at Asarco, the US unit of the world's third-largest copper producer, Grupo Mexico.
Asarco expects to resume talks with unions by the end of this week after postponing strike action at the end of last week.
Labour issues are also gripping the aluminium market. Workers struck Alcoa Inc's Becancour smelter in Quebec, Canada, after rejecting a final contract offer.
Alcoa said it would keep the plant running in the event of a strike, but added that there would be an impact on production.
With expectations of another rise in US interest rates, analysts have been cautious on the outlook for the US economic growth after a strong performance in the first half of this year. China's credit curb to rein in its overheating economy will also have an impact.
Any slowdown in the US could impact China's export business, which has benefited from demand in the United States, Alan Williamson, head of commodity research at HSBC Investment Bank, told an industry conference in London.
Under its drive for urbanisation and industrialisation, China's huge appetite for base metals, to feed an economy that grew 9.8 percent in the year through the first quarter, has been the major factor driving metals prices to multi-year highs.
China's demand for raw materials has also prompted the scramble to get long-term supply contracts with major Chinese buyers and more acquisitions in the global mining sector, analysts said.
State-owned trading house China Minmetals Nonferrous Metals Co is preparing a multi-billion dollar bid for Canadian miner Noranda Inc, challenging an offer by Brazil's Companhia Vale do Rio Doce (CVRD), a market source said.
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