Copper Rises as US Rate Hike Fears Ease and Mine Strikes Loom
Copper prices rose for the second consecutive day on Monday, driven by a reduced likelihood of a US interest rate hike in October and potential labor disruptions in Chile. The benchmark three-month copper contract on the London Metal Exchange climbed 1.2% to $14,427 per metric ton, reaching a high of $14,447.50 earlier in the session. The metal had previously hit a record high of $14,875 on September 10 amid supply concerns before retreating last week.
Sandeep Daga, head of research at Metal Intelligence Centre, attributed the rise to fading expectations of a US Federal Reserve rate hike in October, which was supported by weaker-than-expected US jobs data last week. Higher interest rates typically dampen economic activity and reduce demand for industrial metals like copper, which are sensitive to economic growth.
On the supply side, the threat of strikes at major copper mines in Chile added to the bullish sentiment. Workers at Antofagasta’s Centinela mine may strike as early as October 13 if contract negotiations fail, while supervisors at BHP’s Escondida mine, the world’s largest copper operation, have rejected a contract offer. Traders are also watching for China’s return from a week-long holiday on Thursday to assess demand from the top metals consumer, though domestic demand appears weak.
The cash LME copper contract was trading 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 saw gains, with aluminum rebounding from a three-month low, zinc climbing 1%, lead adding 1.3%, nickel rising 0.4%, and tin gaining 0.6%.