Copper prices have slipped as fears about output disruption at the Escondida mine in Chile recede, but worries about supplies from Vedanta’s copper smelter in India and a softer US dollar provided some support.
Benchmark copper on the London Metal Exchange ended down 0.8 per cent at $US7,255 a tonne. Last week, the metal used widely in the power and construction industries touched $US7,348, its highest since January 2014.
‘Labour negotiations to agree a new contract before the end of June are the big factor. Copper prices will unravel if there is no strike, back towards $US6,900/$US7,000,’ said Societe Generale analyst Robin Bhar.
‘Vedanta’s sterlite smelter closure points to some tightening, we don’t know how long it’s going to be closed for. We would expect Vedanta to challenge the ruling in court.’
ESCONDIDA: The union at BHP’s, Escondida copper mine in Chile said on Friday it saw a ‘favourable scenario’ for reaching a deal on a new labour contract with the company, citing higher copper prices.
In a letter to its members published on its website, the union at the world’s largest copper mine said BHP had promised to respond to its recent proposal for a new contract by 1900 GMT on Monday (0500 Tuesday AEST).
VEDANTA: The Indian state of Tamil Nadu ordered the permanent closure of a copper smelter controlled by Vedanta Resources in May after 13 people protesting to demand its shutdown on environmental grounds were killed.
The smelter has capacity to produce 400,000 tonnes a year, a fair chunk of global supplies estimated at around 24 million tonnes this year.
CHINA: Signs of robust demand from top consumer China are also expected to underpin copper prices.
China imported 475,000 tonnes of unwrought copper and copper products last month, the largest since December 2016. It was the highest May figure for at least a decade, up 22 per cent from the same month last year and up 8 per cent from April.
DOLLAR: A lower US currency makes dollar-denominated commodities cheaper for non-US firms, which could potentially boost demand for industrial metals.
TRADE WAR: Traders and analysts say renewed fears of a trade war in the wake of a divisive G7 meeting over the weekend in Canada were weighing on the base complex.
LME WARRANTS: Traders are watching a large position holding between 40 to 49 per cent copper warrants, which has fuelled worries about a tight LME market and created a premium for the cash contract over the 3-month contract.
PRICES: Aluminium and zinc ended little changed at $US2,301 and $US3,201 respectively, tin shed 0.2 per cent to $US21,175 and nickel lost 0.8 per cent to $US15,290. Lead was untraded at the close, but bid 0.3 per cent higher at $US2,474 a tonne.