Chuquicamata Strike In Day Two But Copper Market Focused On Trade War
(Kitco News) - A two-day-old strike at Codelco’s Chuquicamata copper mine innorthern Chile, along with the potential for walkouts at other major mines, arenot having a significant impact on copper prices as traders worry more aboutthe potential loss of demand amid global trade tensions.
Codelco is Chile’s state-run copper company. Workers walkedoff the job at Chuquicamata on Monday and blocked access to the mine, accordingto news reports.
The Chuquicamata strike is not expected to last more than afew days or weeks, said Robin Bhar, metals analyst with Societe Generale. Forone thing, he said, striking workers do not have as much leverage as in thepast when copper prices were much higher.
Further, the strike is not the primary focus of the coppermarket at the moment, thus is doing little to underpin prices, analysts said.Trade tensions remain the critical factor affecting copper prices, Bhar said,although he noted that Chuquicamata produced some 500,000 tonnes of copper lastyear.
“There are fears of a global slowdown and China specificallyon back of trade tensions,” Bhar said. “Therefore, any strike is not likely tohave an impact. You’re not worried about supply if demand is going loweranyway.”
Comex September copper actually lost a penny a pound onMonday, the day the strike began. As of 11:09 a.m. EDT Tuesday, the contractwas up just 2.05 cents to $2.8120. Previously, September copper fell from apeak of $3.3345 in early June to a low this month of $2.6735.
“There are other significant [potential] supply disruptionson the horizon,” said Daniel Ghali, commodity strategist with TD Securities.
In addition to Chuquicamata, workers at BHP’s Escondidacopper mine in Chile - the largest in the world -- may also go on strike.Reuters quoted a union official as saying workers are expected to reject thecompany’s final contract offer in a vote this week. There is also labor unrestat Chile’s El Teniente mine.
Collectively, these three mines account for some 10% of theglobal output, Ghali said. Still, he continued, the metal has been influencedby weakness in China’s currency on worries that a trade war will destroy demandfor the industrial metal. China is the world’s largest copper-consuming nation.
However, Ghali added, the copper-supply story also may begetting “overlooked” in the current market environment. “Escondida can be acatalyst for a reversal here.”
By Allen SykoraFor Kitco News
Follow @AllenSykora
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