Comex copper futures finished on Monday with healthy increases and prospects for more gains after it rallied throughout the session on Friday following a strike vote at the world's largest copper mine in Chile, traders said.
Talks resumed at Escondida on Monday between management, the union, and a mediator. If they fail to reach an agreement, however, supply pressures would mount amid concerns at other copper producers.
"No doubt the (copper) gains are from the Escondida news lingering around. But, overall, it's low visible stocks and that story continues," said one copper dealer.
Copper for September delivery closed 2.10 cents higher at $3.57 a lb on the New York Mercantile Exchange's COMEX division, after jumping to a two-week high at $3.6550.
Spot August copperended up 2.60 cents at $3.61, and reached a high at $3.69 a lb, a level last visited on July 18. COMEX estimated final copper volume at 11,000 lots, up sightly from Friday's official turnover at 9,348 lots. Noting the healthy amount of copper buying at month end, one trader said he sees more upside in store.
"At this point I have to still be friendly towards copper. You combine investment money at month end with low stocks and I would say it goes higher. There may be a couple of bumps in the road, but I think the trend is higher," he said. Prices gapped up at the open in London, supported by Escondida mine workers' vote for a strike on August 7 if talks with the company fail to yield an acceptable labour contract.
BHP Billiton, world's largest miner, is majority owner of the open-pit Escondida mine that employs over 2,000 workers in Chile. It expects 2006 copper output to be similar to last year's level of 1.27 million tonnes. On Friday, state-owned Codelco, the world's largest copper company, said a rockslide at its massive Chuquicamata mine in northern Chile would take weeks to resolve, though it said it had no target date for when normal production would resume. It estimated lost production of about 960 tonnes a day.