Copper prices rose on Tuesday, supported by supply disruptions as a labour strike halved output at one of the world’s largest mines in Chile and Glencore’s Zambian smelter shut for refurbishment.
The Codelco-owned Chuquicamata mine, which produced 320,744 tonnes of copper in 2018, headed for its fourth day of a stoppage after a failed labour deal last week.
In Zambia, Mopani Copper Mines has shut down its Mufulira smelter for major refurbishment, the Glencore-owned company said late on Monday.
“I would say copper disruptions are running slightly ahead of expectation this year,” said Colin Hamilton, head of commodities research at BMO Capital Markets, adding that this boosted copper fundamentals.
BMO has forecast a deficit of 260,000 tonnes this year in the 24-million tonne market, Hamilton said.
Benchmark copper on the London Metal Exchange (LME) was up 0.5% at $5,875 per tonne in official trading rings, its highest in nearly a week.
COPPER STOCKS: Supporting prices was a slight decline in headline copper inventories in warehouses monitored by the LME. They fell 600 tonnes to 250,750 tonnes. MCUSTX-TOTAL
Inventories of copper in warehouses registered with the Shanghai Futures Exchange have nearly halved since mid-March to 139,556 tonnes. CU-STX-SGH
CHINA COPPER: China data showed refined copper output fell by 5.2% year-on-year and 3.9% month-on-month to 711,000 tonnes in May, reinforcing views of a tight market and supporting prices.
INDONESIA COPPER: Indonesian copper miner Amman Mineral Nusa Tenggara said it expected to export about 236,000 tonnes of copper concentrate in 2019, below its export quota, as it increases supplies to a local smelter.
COPPER LONG-TERM: Analysts at BofA Merrill Lynch said the U.S-China trade dispute overshadowed strong copper fundamentals, with steady Chinese demand and falling treatment and refining charges.
“De-escalation is possible (in the trade war), but until that materialises, sustained copper rallies are unlikely,” the bank said in a note.
INTEREST RATES: U.S. Federal Reserve is expected to lay the groundwork for a rate cut later this year at a meeting on Wednesday, a day after the European Central Bank indicated a possibility of new rate cuts or asset purchases.
LME TRADING VOLUME: The LME’s three-month trial of switching to electronic closing prices for one of its benchmark base metal contracts has failed to lift volumes, industry sources said, lending further support to traditional open outcry trading.
JAPAN STEEL: The head of Japan’s steel industry body said on Tuesday there were some signs of a slowdown in steel demand for use in machinery and IT equipment resulting from the escalating trade spat between the United States and China.
PRICES: Aluminium was bid up 0.1% to $1,761 per tonne after failing to trade in official activity.
Zinc traded 0.2% higher at $2,476, lead was bid 0.2% higher at $1,890, tin eased 0.4% to $18,875 while nickel was mostly steady at $11,775.