Copper prices dip as dollar strength outweighs supply fears
Copper prices retreated on Tuesday after a brief rally, despite easing expectations of a US interest rate hike and rising concerns over potential mine strikes in Chile. The decline came as a stronger dollar added pressure to the metal, offsetting bullish factors. Benchmark three-month copper on the London Metal Exchange had climbed 1.2% on Monday to $14,427 per metric ton before reversing course. The metal had reached a record high of $14,875 on September 10, driven by supply tightness outside the US.
In US trading, December copper futures dropped 0.3% to $6.62 per pound. The shift in market sentiment followed weaker-than-expected US employment data, which reduced the likelihood of an October rate hike. Higher interest rates typically dampen demand for industrial metals like copper, which are sensitive to economic growth.
Supply-side concerns continued to support copper prices, with potential strikes looming at key mines. A union leader warned that a strike at Antofagasta’s Centinela copper mine could begin on October 13 if contract negotiations fail. Additionally, supervisors at BHP’s Escondida mine, the world’s largest copper operation, rejected a contract offer, adding to supply risks.
Traders are now watching China’s return from its week-long national holiday on Thursday to gauge demand for the fourth quarter. Analysts noted that copper inventories in China are low, though domestic demand has shown signs of weakness. Some smelting operations may be suspended for maintenance, further complicating the supply outlook.