SMM Price Outlook for Base Metals on SHFE (May 25, 2017)

With the National Day holiday approaching, SMM conducted a survey on pre-holiday stockpiling and production arrangements among 19 secondary copper rod enterprises across 8 provinces and cities, including Anhui, Hubei, Hebei, Tianjin, Guangdong, Jiangxi, Sichuan, and Henan, with a combined annual capacity of 2.19 million mt.

Luis Redlich, president of the Centinela District union at Antofagasta Minerals’ Centinela copper mine, said the union will vote on the company’s wage proposal next week. He described negotiations as having reached an impasse and expects members to reject the offer, which would initiate the strike process. Redlich acknowledged that workers’ demands were high but said he believed an agreement could still be reached through government mediation. Centinela produced approximately 174,300mt of copper in concentrate last year. Antofagasta had previously planned to invest $3.7 billion to expand the mine, but is reassessing the project following Chile’s increase in mining taxes. Under Chilean law, if the offer is rejected, the parties must enter a five-day government mediation process, which can be extended by another five days, before a legal strike can take place. Any production stoppage at Centinela would weaken Antofagasta’s ability to meet its second-half output targets, while its full-year copper production guidance of 650,000–700,000 tonnes is already under pressure.