The price of copper rose 1 percent on Monday to its highest level in over two weeks, buoyed mostly by supply disruptions after workers at Peru's top copper miner downed tools indefinitely late last week. Workers at Freeport-McMoRan's Cerro Verde in Peru started an indefinite strike on Friday that halted output of about 40,000 tonnes per month.
This added to supply disruptions caused by a month-long stoppage at BHP Billiton's Escondida mine in Chile and Freeport's Grasberg mine in Indonesia. "Fundamentals are positive for base metals and for copper. Both if you look at the trend in mining production and the short-term disruptions adding some support," said Danske commodities analyst Jens Pedersen.
However, base metal prices are unlikely to rise much further ahead of the US Federal Reserve meeting this week, Pedersen said, as expectations of an interest rate increase will push up the dollar, making metals more expensive for investors holding other currencies. Three-month copper on the London Metal Exchange closed 1.1 percent higher at $5,796 a tonne.
The contract price fell 3.1 percent last week, the most since December, partly on a stronger dollar as expectations rose that the Federal Reserve will announce a rate rise on Wednesday. Other commodities also suffered their biggest weekly declines in months last week after recent rallies showed signs of petering out, pressured by a glut and tepid demand from top consumer China. BMI Research said it raised its 2017 copper price forecast to $5,500 from $5,150 on solid Chinese demand growth and supply disruption concerns.
The union at BHP's Escondida mine, the world's largest, rejected BHP's offer to return to the negotiating table on Saturday, and called on the company to clarify its negotiating position.
Zinc jumped 1.6 percent to $2,757 a tonne, its highest level in a week. Aluminium gained 0.1 percent to $1,882 per tonne. Nickel climbed 2.7 percent, its biggest daily jump in nearly a month, to $10,160 a tonne, after sliding 10 percent last week. Lead rose 0.5 percent to $2,274, while tin traded 0.5 percent higher at $19,450 per tonne.