Copper prices fell more than 2 percent on Tuesday, but held steady around $7,800 a tonne on concerns about tight supply following a strike vote at the world's largest copper mine in Chile.
Chile's Escondida must raise its salary offer to union workers by Wednesday if it wants to avoid a crippling strike, union workers said on Monday. A strike by about 2,000 workers at Escondida would begin August 7 if talks fail.
Copper for delivery in three months on the London Metal Exchange was down $150, or 1.9 percent, at $7,800. On Select, the electronic trading platform, the metal had traded as low as $7,780, down $170 or 2.1 percent.
"With Escondida producing an estimated 3,475 tonnes of copper per day, any protracted strike could soon have a significant impact on stocks," BaseMetals.com analyst William Adams said in a daily note.
"With the scene now set for stronger copper prices, it will be interesting to see if prices do indeed manage to make headway. Failure to do so would indicate the market is still attracting liquidation selling," he said.
On Monday, copper ended up $280, or 3.6 percent, at $7,950, supported by the strike vote at Escondida and a fall in LME stocks. Copper stocks in LME warehouses fell 900 tonnes to 97,450, equivalent to around two days of global consumption.
A metals dealer with a major Japanese trading house in Tokyo put resistance for copper at $8,000 and then $8,200, with support at $7,500 in the short term.
"The market focus is whether copper prices can breach the $8,000 level and hold above this level," he said. In electronic trade, the most active September copper rose 0.55 cents to $3.5755 a lb after trading between $3.5690 and $3.6050 on COMEX.
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