Copper Pulls Back as Mine Strike Ends
24 March 2017 - 11:36PM
Dow Jones News
By Katherine Dunn and Ryan Dube
LONDON--Copper prices fell on Friday, as the end of a strike at
the world's largest copper mine eased supply worries.
The three-month London Metal Exchange copper price fell by 0.57%
to $5,816 per metric ton in midmorning trade in Europe.
Gold prices were also slightly lower, by 0.09% at $1,244.14 a
troy ounce. The precious metal's pullback came ahead of the vote in
the U.S. House of Representatives on health care reform, which is
being viewed by some investors as a test of the Trump
administration's ability to enact its agenda.
On Thursday, workers at the Escondida copper mine in northern
Chile said they would end a strike at the mine, which is
majority-owned by BHP Billiton Ltd.
The leader of the mine's largest union, Union No. 1, said
workers would return to work on Saturday. The workers had agreed to
implement an article which will allow them to return to work with
their current collective agreement for 18 months.
On Friday, the agreement to end the strike--which began Feb. 9,
was pushing prices down, but the size of the decline was muted,
noted Nitesh Shah, a commodities strategist at ETF Securities in
London, as the agreement hasn't resolved the underlying issues
behind the strike.
"It is sort of kicking the can down the road a bit," said Mr.
Shah.
The mine produces about 5% of the world's copper production, and
the six-week strike took out about 1% of the world's annual copper
production, he estimated.
Other supply disruptions, at Freeport-McMoRan Inc's Grasberg
copper mine in Indonesia, which is stalled over an export dispute
with the government, and a strike at the Cerro Verde copper mine in
Peru, are continuing.
The decline in copper's price was likely muted by a lingering
expectation of better demand prospects for industrial metals on the
back of President Trump's campaign promises to fuel infrastructure
spending and overhaul tax reform, Commerzbank said in a note.
"This could turn out to be a mistake, however, especially if
U.S. President Trump loses the U.S. House of Representatives health
care reform vote that was postponed until today--as this would also
jeopardize the planned tax reform," the German bank said.
Restrictions in Chinese cities on new real estate buying could
also dampen demand from China, the world's top consumer of copper,
the bank said. Chinese appetite for the metal far outstrips U.S.
demand, which is around 8%, and so any change in demand from China
is likely to have a far bigger impact on the supply balance than
Mr. Trump's policies, analysts have said.
The other base metals were largely higher on Friday. Aluminum
was up 0.26% at $1,937 per metric ton, lead was down 0.11% at
$2,365.50 a ton, zinc was up 0.14% at $2,832.50 a ton, nickel was
down 0.60% at $9,955 per ton, and tin was down 0.30% at $20,210 per
ton.
Among the precious metals, silver was up 0.11% at $17.60 a troy
ounce, platinum was down 0.22% at $958.85 a troy ounce and
palladium was up 0.50% at $806 a troy ounce.
Write to Katherine Dunn at Katherine.Dunn@wsj.com and Ryan Dube
at ryan.dube@dowjones.com
(END) Dow Jones Newswires
March 24, 2017 08:21 ET (12:21 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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