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BASE METALS: Mine Strike Lifts Comex Copper To Three-Month High
Aug 1,2011 09:51CST
industry news
Source:SMM
Copper futures rose slightly Friday as production disruptions at the world's largest mine outweighed pressure from the uncertain state of U.S. debt-ceiling talks.

Jul 29, 2011 (Dow Jones Commodities News via Comtex) -- --Labor strike continues at Chile's Escondida mine

--Traders act cautious, with US House set for vote Friday on amended Republican debt-ceiling bill

--Weaker-than-expected US GDP growth weighed down copper prices earlier in session

By Matt Day
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Copper futures rose slightly Friday as production disruptions at the world's largest mine outweighed pressure from the uncertain state of U.S. debt-ceiling talks.

Copper for September delivery, the most actively traded contract, rose 1 cent, or 0.2%, to settle at $4.4795 a pound on the Comex division of the New York Mercantile Exchange, the highest ending price since April 11.

A strike at Chile's Escondida mine seemed no closer to a resolution Friday. Controlled by BHP Billiton Ltd. (BHP, BHP.AU), the mine produced 6.7% of global copper output last year.

"There is no end to the bad news on the copper market, which is actually good for the price of copper," analysts at Commerzbank said in a note. "The strike at the Escondida mine has now lasted a week and is continuing, with no prospect of an early settlement."

Increases in copper-mine supply were widely expected to fall short of growing global demand this year, and the strike at Escondida has helped keep copper prices at historically high levels despite worries about the health of the U.S. and European economies.

Chile, the world's largest producer of the industrial metal, reported this week that copper production during the first half of the year was down 2% from 2010 levels.

Members of the mine workers' union began striking June 21 to protest what they say were unmet terms in their contract. BHP disagrees, saying that the strike is illegal. The company Wednesday declared force majeure on its copper concentrate shipments, allowing it to halt its shipments because of events beyond its control.

Copper had traded in negative territory earlier Friday, pressured by a report showing slow growth in the world's second largest copper consumer. The U.S. economy expanded at a rate of 1.3% during the second quarter, the Commerce Department said Friday, short of economists' expectations for a rise of 1.8%. The first-quarter figure was revised sharply lower, to a 0.4% rate, from the previous estimate of a 1.9% rise.

Copper is sensitive to the growth outlook because of its widespread use in manufacturing and construction. With questions looming about the effect of monetary tightening measures in China and still-unresolved debt issues in the U.S. and Europe, analysts say copper may be due for a pullback should current supply disruptions ease.

"Copper looks pretty pricey at $4.50, based on where we are in the state of the global economy," said Adam Klopfenstein, a senior market strategist with Lind-Waldock.

Copper settlements (ranges include electronic and pit trading):
Aug  $4.4740; up 0.95 cent; Range $4.4100-$4.4780
Sept $4.4795; up 1.00 cent; Range $4.4115-$4.5020

 

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