Copper prices climb as US rate hike odds dim and Chile strike risks grow

Copper prices strengthened for a second day on Monday, buoyed by diminishing expectations of a US interest rate hike and the threat of mine strikes in Chile. Benchmark three-month copper on the London Metal Exchange (LME) climbed 1.2% to $14,427 per metric ton, peaking at $14,447.50 earlier in the day. The metal had previously hit a record high of $14,875 on September 10 due to supply concerns before retreating last week.

Sandeep Daga, head of research at Metal Intelligence Centre, noted that copper’s rise was supported by an uptick in equities as the likelihood of an October US Federal Reserve rate hike faded. Weaker-than-expected US jobs data last week reduced the odds of a rate increase, which would typically weigh on demand for industrial metals like copper.

Supply-side concerns also played a role, with potential strikes looming at Antofagasta’s Centinela copper mine and BHP’s Escondida mine, the world’s largest. The strike at Centinela could begin as early as October 13 if contract negotiations fail. Meanwhile, traders are watching China’s return from a week-long holiday on Thursday to assess demand, though domestic demand appears weak despite thin stocks and smelter maintenance suspensions.

The cash LME copper contract traded at a premium of nearly $73.50 per ton over the three-month forward, up from $53.50 on Friday, signaling tightening near-term supply. Other metals in the LME complex also rose, with aluminium rebounding from a July low, zinc climbing 1%, lead adding 1.3%, nickel nudging up 0.4%, and tin gaining 0.6%.