Copper Pulls Back as Dollar Strengthens

By Katherine Dunn 

LONDON--Copper prices drifted lower Tuesday as a stronger dollar and profit-taking weighed on the metal, even as supply disruptions continued in Chile and Indonesia.

The three-month London Metal Exchange copper price was down 0.30% at $6,053 per metric ton in midmorning trade in Europe.

On Tuesday, the WSJ Dollar Index was up 0.43%. A stronger dollar makes the metal more expensive for buyers who hold other currencies.

Traders in the U.S. also return to the market on Tuesday, after markets were closed on Monday for Presidents Day. Trading Tuesday before the U.S. returned was light.

However prices are still "fairly well supported" by supply problems including a strike at the Escondida mine in Chile, said Liz Grant, an analyst at Sucden in London. Going forward, "if that strike starts to ease, you'll see a knee-jerk to the downside."

Freeport-McMoRan Inc.'s Grasberg mine has also seen disruptions over the terms of its export license, and another potential dispute at a second Chilean mine has raised further supply worries.

Anglo American PLC said it would suspend operations at its El Soldado copper mine in Chile after it didn't receive regulatory approvals for a redesign. While the mine is a fraction of the size of the Escondida mine, the freeze adds another ingredient to a market that has seen constant supply worries so far this year.

On Tuesday, mining giant BHP Billiton Ltd. said it would review its copper guidance for the 2017 fiscal year due to the strike at its Escondida mine. In a call with reporters after the company reported its latest earnings, BHP's chief executive said talks had also restarted between the mine's union and management.

Union workers at the Escondida mine have been on strike since Feb. 8, after government mediation between the union and management over benefits and pay broke down. The mine produces roughly 5% of the world's copper.

In Indonesia, Arizona-based Freeport-McMoRan Inc. is at loggerheads with the Indonesian government over the terms for granting the company's Grasberg copper mine an export license. The company has said it would consider going to arbitration if the issue isn't resolved in the next 120 days, and the government has said it could also bring Freeport to arbitration.

The other base metals were largely lower on Tuesday. Aluminum was down 0.45% at $1,892.50 per metric ton, lead was down 1.04% at $2,292 per ton, zinc was up 0.10% at $2,883 per ton, nickel was down 0.45% at $11,105 per ton, and tin was down 0.05% at $19,850 per ton.

Biman Mukherji, Rhiannon Hoyle and Sara Schonhardt contributed to this article.

Write to Katherine Dunn at [e-mail]

(END) Dow Jones Newswires

February 21, 2017 06:09 ET (11:09 GMT)

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