Copper Eases Ahead of Mine Labor Talks
February 17 2017 - 6:54AM
Dow Jones News
By Katherine Dunn
LONDON--Copper prices fell Friday to a one-week low, under
pressure from a stronger dollar and profit-taking after supply
concerns pushed the metal to 20-month highs earlier in the
week.
The London Metal Exchange three-month copper contract was down
0.40% at $5,966 per metric ton at $5,966 per metric ton in
midmorning European trading. The contract was down almost 2% for
the week on Friday.
The WSJ Dollar Index, which weighs the dollar against a basket
of other currencies, was up 0.12% on Friday. A stronger dollar
makes dollar-denominated commodities more expensive for investors
who hold other currencies.
Stocks were also pulling back on Friday, as investors questioned
the pace of a recent rally, which pushed the Stoxx Europe 600 to
its longest winning streak since 2013. That ended on Thursday.
The dip in copper comes amid a backdrop of supply concerns that
has helped the metal gain more than 8% since the year began. In
Chile, workers are striking at the Escondida mine, the largest
copper mine in the world, over a pay and benefits dispute with
management. The mine is majority-owned by BHP Billiton Ltd.
Earlier this week, the union said it would enter negotiations
with management, which helped undercut expectations that the strike
could be long.
"I think the market got a bit spooked when the workers said they
would negotiate," said William Adams, head of research at
FastMarkets in London.
Those negotiations have yet to begin and a time for them hasn't
been agreed upon, according to a spokesperson for BHP. It is
unlikely they will begin before Monday, the spokesperson said.
The Grasberg copper mine in Indonesia, owned by Freeport-McMoRan
Inc. has also ceased production due to a disagreement between the
company and the government over the granting of an export
license.
Those supply jitters have helped fuel the rally and attract
investors to the market, with open interest on the market hitting a
historical high, said ING.
"With a number of events happening simultaneously in the copper
market, specs have been attracted to copper, while producers are
likely to have taken advantage of the market strength to do some
pricing," ING said in a note.
But analysts have long warned that those gains could quickly
deflate on signs of a resolution to the disputes at the Grasberg
and Escondida mines.
The other base metals were mostly lower on Friday. Aluminum was
down 1.47% at $1,876 per ton, lead was down 0.72% at $2,281 per
ton, zinc was down 0.92% at $2,839 per ton and nickel was down
0.72% at $10,965 per ton. Tin gained 0.99% to $19,820 per ton.
Riva Gold contributed to this article.
Write to Katherine Dunn at Katherine.Dunn@wsj.com
(END) Dow Jones Newswires
February 17, 2017 06:39 ET (11:39 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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