Copper Pulls Back as Mine Strike Ends

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.

The three-month London Metal Exchange copper price fell by 0.57% to $5,816 per metric ton in midmorning trade in Europe.

Gold prices were also slightly lower, by 0.09% at $1,244.14 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 which 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 production, 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 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 dampen 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.

The other base metals were largely higher on Friday. Aluminum was up 0.26% at $1,937 per metric ton, lead was down 0.11% at $2,365.50 a ton, zinc was up 0.14% at $2,832.50 a ton, nickel was down 0.60% at $9,955 per ton, and tin was down 0.30% at $20,210 per ton.

Among the precious metals, silver was up 0.11% at $17.60 a troy ounce, platinum was down 0.22% at $958.85 a troy ounce and palladium was up 0.50% at $806 a troy ounce.

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

(END) Dow Jones Newswires

March 24, 2017 08:21 ET (12:21 GMT)

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