Copper Prices Slump as Stronger US Dollar Meets Supply Jitters in Chile

Copper prices have taken a hit due to a stronger US dollar and China's pre-holiday slowdown, which has cooled buying demand. The metal is priced in dollars, so when the greenback strengthens, it becomes more expensive for buyers using other currencies.

The supply story, however, is moving in the opposite direction. Disruptions at major Chilean mines have tightened near-term supply, with BHP suspending operations at Escondida after a fatal accident and unions at Antofagasta pushing Centinela toward a strike vote.

This has caused a stress signal for near-term copper supply on the London Metal Exchange (LME), with the 'cash premium' jumping to $107.5 a ton from zero a week earlier. This premium is a sign that nearby metal is suddenly harder to source, leading traders to pay up to get copper now rather than later.