While copper stockpiles (at COMEX) are at their highest since 2004, prices have remained relatively high thanks to Trumpflation hopes, China stimulus hype, and Indonesia's export ban. However, recent short-term weakness (following China's tightening move) have been erased overnight as prices jump on news of a strike at Escondida mine in Chile - the world's largest - due to begin tomorrow.
Despite massive inventories...
Supply concerns are back on the agenda for traders as The Wall Street Journal reports workers at the world’s largest copper-mining operation are expected to strike on Thursday, driving up copper prices on fears of a shortage of the metal and expectations it could trigger stoppages at other mines.
A strike at the BHP Billiton Ltd.-controlled Escondida mine in Chile would follow unsuccessful talks on worker compensation between union officials and management, most recently mediated by the Chilean government. It would halt production from the mine in the Atacama Desert in northern Chile that accounts for roughly 5% of global output of copper.
It could also set a precedent for other copper mines facing wage negotiations this year, particularly in Chile, but also in the U.S., analysts say.
A week ago, union workers at Escondida voted to strike, having rejected an offer from operator Minera Escondida that workers say would cut into their benefits. The company requested that authorities intervene to mediate negotiations, but on Tuesday union officials said they were no closer to a deal.
“The position the company has taken doesn’t allow us to see a solution to the conflict,” Union No. 1 said. “The union and its more than 2,500 workers will continue with its contingency plan to start the strike on Thursday.”
And the reaction is clear for now...