Metals: Copper Pulls Back as Mine Strike Ends in Chile

By Katherine Dunn and Ryan Dube 

LONDON -- Copper prices fell on Friday, as the end of a strike at the world's largest copper mine eased supply worries.

Copper for May delivery fell 0.4% to $2.6350 a pound on the Comex division of the New York Mercantile Exchange.

Gold for April delivery was 0.2% lower at $1,244.20 a troy ounce. The precious metal's pullback came ahead of the vote in the U.S. House of Representatives on health care reform, which is being viewed by some investors as a test of the Trump administration's ability to enact its agenda.

On Thursday, workers at the Escondida copper mine in northern Chile said they would end a strike at the mine, which is majority-owned by BHP Billiton Ltd.

The leader of the mine's largest union, Union No. 1, said workers would return to work on Saturday. The workers had agreed to implement an article that will allow them to return to work with their current collective agreement for 18 months.

On Friday, the agreement to end the strike, which began Feb. 9, was pushing prices down, but the size of the decline was muted, noted Nitesh Shah, a commodities strategist at ETF Securities in London, as the agreement hasn't resolved the underlying issues behind the strike.

"It is sort of kicking the can down the road a bit," said Mr. Shah.

The mine produces about 5% of the world's copper, and the six-week strike took out about 1% of the world's annual copper production, he estimated.

Other supply disruptions, at Freeport-McMoRan Inc.'s Grasberg copper mine in Indonesia, which is stalled over an export dispute with the government, and a strike at the Cerro Verde copper mine in Peru, are continuing.

The decline in copper's price was likely muted by a lingering expectation of better demand prospects for industrial metals on the back of President Donald Trump's campaign promises to fuel infrastructure spending and overhaul tax reform, Commerzbank said in a note.

"This could turn out to be a mistake, however, especially if U.S. President Trump loses the U.S. House of Representatives health care reform vote that was postponed until today -- as this would also jeopardize the planned tax reform," the German bank said.

Restrictions in Chinese cities on new real-estate buying could also damp demand from China, the world's top consumer of copper, the bank said. Chinese appetite for the metal far outstrips U.S. demand, which is around 8%, and so any change in demand from China is likely to have a far bigger impact on the supply balance than Mr. Trump's policies, analysts have said.

Write to Katherine Dunn at [e-mail] and Ryan Dube at [e-mail]

(END) Dow Jones Newswires

March 24, 2017 10:26 ET (14:26 GMT)

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