Copper Rises on Fed Rate Hike Fade and Chilean Strike Fears

Copper prices rose this week, supported by fading expectations of a US Federal Reserve rate hike and growing strike risks at key Chilean mines. Benchmark LME copper climbed 0.8% to $14,365 a ton, as traders reacted to softer US jobs data, which reduced the likelihood of another Fed rate increase. Lower borrowing costs tend to boost demand for industrial metals like copper by easing financial pressure on businesses.

The potential for labor disruptions in Chile added another layer of uncertainty. Workers at Antofagasta’s Centinela mine and supervisors at BHP’s Escondida mine, one of the world’s largest copper operations, rejected contract offers, raising the possibility of strikes. These risks are already influencing market behavior, with the cash copper contract trading $63 a ton above the three-month contract on the LME, up from $53.50 on Friday. This backwardation suggests that buyers are willing to pay a premium for immediate delivery, signaling tight near-term supply.

Market participants will be watching China’s return from its week-long national holiday for further clues. Thin local inventories and upcoming smelter maintenance could drive post-holiday restocking, potentially tightening supply further. The current cash premium indicates potential volatility in hedging costs for manufacturers and merchants who need copper delivered soon rather than later.