Copper prices were boosted on Wednesday by fears that the strike at Chile's Escondida, the world's largest copper mine, could go on for longer than previously expected.
Historically strikes in Chile have been short-lived, but the feeling that this one could be an exception is growing. Union workers said on Wednesday they were planning to call off scheduled talks unless the mine's owners revised their labour contract offer.
Copper for delivery in three months ended up 1.7 percent or $140 a tonne at $8,030 in official trading on the London Metal Exchange. Wednesday's range was $7,740 to $8,095.
"The market is focusing again on strikes," said Edward Meir, commodity analyst at Man Financial. "Especially now we have the Fed out of the way."
On Tuesday the US Federal Reserve left benchmark interest rates on hold at 5.25 percent, but said little to clear up confusion about the need for further monetary tightening.
One reason why copper fell by nearly two percent in early trade was the market fretting about falling demand as economic growth in the United States, which accounts for more than 30 of global gross domestic product, slows.
But that was shrugged off as thoughts returned to Escondida.
More than 2,000 workers started the strike on Monday at Escondida, majority-owned by BHP Billiton, cutting production by about 60 percent and forcing it to declare force majeure on deliveries of copper concentrates.
Force majeure clauses free companies from their obligations, without penalties if events are beyond their control and are normally used in the case of natural disasters.
Escondida accounts for about 8 percent of global copper production, 20 percent of Chilean copper output and 2.5 percent of the country's gross domestic product.
Also haunting copper is Chile's Codelco, which last week said it was hoping its Chuquicamata mine would be back to normal within three months after a rockslide hit production there.
Copper stocks in LME warehouses rose 2,075 tonnes to 104,750 tonnes - little more than 2 days of global consumption.
Stocks of most metals were tight, supporting the market.
Nickel prices have also been underpinned since Inco said on July 28 it had started an orderly shutdown of production facilities at its Voisey's Bay nickel mine in Canada after union workers went on strike.
Stocks rose 246 tonnes to 6,204, but that is less than two days of global consumption. Nickel ended up $275 at $26,375, not far from July's record high of $26,850 - a level analysts expect to see again this year.
Aluminium rose to $2,590 from $2,565 on Tuesday as LME stocks fell 1,900 tonnes to 696,875.
Zinc added $85 to close at $3,500 as stocks slipped 1,575 tonnes to 185,500, their lowest since 1992.
Lead, which has seen some speculative buying this week, rose $20 to $1,205 and tin gained $5 to $8,430.
Comments
Comments are closed.