Copper Falls as Supply Concerns Diminish

By Katherine Dunn and Biman Mukherji 

LONDON--Copper prices fell to a one-week low on Tuesday on hopes that supply disruptions in Chile and Indonesia could be drawing to a close.

The three-month London Metal Exchange copper price fell 0.83% to $5,827 per metric ton in midmorning European trading, the lowest price since March 13.

Gold also fell Tuesday, by 0.12% to $1,232.36 a ton, despite a weaker dollar, which makes dollar-priced commodities less expensive for holders of other currencies. Some analysts pointed to Monday's French presidential debate as undermining gold's appeal as a haven.

"It is possible that the weakness is due to yesterday's TV debate in France, which flash polls suggest was won by the EU-friendly candidate Macron," said Commerzbank in a note. "This is likely to boost his standing as favorite in the presidential elections."

Copper, meanwhile, pulled back as BHP Billiton Ltd., the majority-owner of the Escondida mine in Chile, and union workers are expected to hold talks which could lead to a settlement.

The base metal is also reacting to reports that Freeport-McMoRan Inc's Indonesian unit has resumed production of copper concentrate at its Grasberg mine, after a suspension of more than a month.

The potential for those supply disruptions to end outweighed the weaker dollar and severe flooding in Peru, which may disrupt mining operations and transport. The country is the world's second-largest copper producer.

On Tuesday, the WSJ Dollar Index, which weighs the dollar against other currencies, was down 0.26%.

Copper's downward movement could represent a correction after it rallied in recent months, partly on improving sentiment toward demand in China and hopes that a Trump administration would invest heavily in infrastructure. Copper is still up 5.77% since the year began.

The infrastructure spending "is unlikely to be forthcoming either on the scale anticipated nor as quickly as is hoped," Commerzbank said in a morning note.

Among the other industrial metals, aluminum was up 0.89% at $1,934.50 per ton, lead was up 1.10% at $2,293.50 a ton, zinc was up 0.61% at $2,881 per ton and tin was up 0.74% at $20,450 per ton. Nickel was down 0.05% at $10,170 per ton.

Among precious metals, silver was down 0.17% at $17.42 per ton; platinum was down 0.54% at $964.75 a ton; and palladium was up 0.56% at $786.85 a ton.

Write to Katherine Dunn at [e-mail] and Biman Mukherji at [e-mail]

(END) Dow Jones Newswires

March 21, 2017 07:54 ET (11:54 GMT)

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