LONDON: Copper prices fell to their lowest in more than two weeks on Monday as a firm dollar and demand worries weighed on sentiment, but losses were contained by the potential for a strike at the world’s largest copper mine.
Benchmark copper on the London Metal Exchange (LME) was down 1% at $9,368.5 a tonne at 1555 GMT after touching its lowest since July 21 at $9,273.
“The dollar is one factor behind the selling and the other is Chinese demand,” one copper trader said, adding that the rising risks of a strike at the Escondida mine in Chile are raising concerns over supply.
JOBS: The dollar was trading close to four-month highs against a basket of currencies after a robust US jobs report encouraged investors to bring forward their bets on the Federal Reserve reducing its pandemic-driven stimulus.
A higher US currency makes dollar-priced commodities more expensive for holders of other currencies, which could subdue demand.
ESCONDIDA: The union representing workers at Chile’s Escondida copper mine has instructed its members to prepare for a strike after slow progress in talks being mediated by the government.
The mine accounts for about 4.5% of global copper supplies estimated at roughly 24 million tonnes this year.
DEMAND: Analysts say pent-up Chinese demand since the start of the coronavirus crisis has peaked. They forecast growth to moderate amid supply chain bottle necks and outbreaks of COVID-19 variants.
IMPORTS: China’s copper imports in July fell 1% from June, declining for a fourth straight month as high prices, the release of state reserves and increased scrap metal inflows kept buying interest at bay.
DATA: Clues to demand prospects for industrial metals will come from Chinese data over the next few days, total social financing, money supply growth and investment.
LEAD: Low stocks of battery metal lead in LME-registered warehouses have fuelled concern about metal availability.
This has created a premium for the cash over the three-month lead contract. The premium currently about $15 a tonne - rose to nearly $40 last week. Three-month lead was down 0.4% to $2,265 a tonne. OTHER METALS: Aluminium fell 1% to $2,553 a tonne, zinc lost 0.9% to $2,965, tin was down 0.2% at $34,675 and nickel ceded 3.1% to $18,610.