US copper futures closed at their highest in two months on Monday, sparked by fears a strike at one of Chile's largest copper mines would keep supply tight, analysts said. Copper for September delivery settled up 3.50 cents at $3.6295 per lb at the New York Mercantile Exchange's Comex division.
That was its loftiest settlement since May 9. Trading ranged from an overnight low of $3.5890 to a session peak of $3.6650. Floor traders cited some profit taking near the close of business as investors cashed in following the market's recent rally that saw prices climb more than 11 percent from the June 27 low at $3.29.
But they said the bullish momentum remained intact and believed the market had scope to challenge the May highs. "It's a very strong technical move. It looks like we almost had a triple-bottom that started in May and we have been making higher highs and higher lows, so technically, this market is due for a strong rally from these levels," said one.
Futures volumes just before the close were estimated at 10,905 lots, compared with Friday's official count at 10,313 lots. As of July 6, open interest in Comex copper futures rose 854 lots to 85,529 contracts.
Workers at the privately owned Collahuasi copper mine in Chile began an indefinite strike on Monday after failing to reach an agreement with management over pay and conditions. The mine, majority-owned by global miners Strata Plc (with 44 percent) and Anglo American (44 percent), produces some 440,000 tonnes of copper per year, or about 8 percent of Chile's total.
"I think it is a combination of the fact that the strike is hitting right now with such low inventories in warehouses," said Zachary Oman, senior trader with Wisdom Financial. "I think you're seeing more of a push higher just from the complex overall and the fact that stocks are down so much. You are getting a lot of support out of the strike, but I don't necessarily think it's the strike that's doing the majority of the pushing.
I think the strike is holding the market where it is right now," he said. London Metal Exchange copper stocks dropped 3,400 tonnes to 102,075 tonnes on Monday, their lowest since last August and just over two days worth of global consumption.
Comex stocks held steady at 22,123 short tons on Friday. The Collahuasi news provided the spark to push London Metal Exchange copper for delivery in three months above the psychological $8,000 a tonne before ending at $7,990, up $150 from Friday's close.