Copper rises on US rate hike uncertainty and supply concerns
Copper prices climbed for the second consecutive day on Monday, supported by diminishing expectations of a US interest rate hike in October and potential labor strikes in Chile. The benchmark three-month copper contract on the London Metal Exchange rose 0.8% to USD14,365 per metric ton, following a record high of USD14,875 reached on September 10. Sandeep Daga, head of research at Metal Intelligence Centre, attributed the metal's strength to improving equities and fading Federal Reserve rate hike prospects, which would otherwise weigh on industrial metal demand.
Weaker-than-expected US jobs data last week reduced the likelihood of an October rate increase, a move that typically dampens economic activity and metal demand. On the supply side, tensions loom as a strike at Antofagasta’s Centinela copper mine could begin on October 13 if contract talks fail, while supervisors at BHP’s Escondida mine, the world’s largest, rejected a contract offer. Traders are also watching China, the top metals consumer, as it returns from a week-long holiday on Thursday to assess demand in the fourth quarter.
The cash LME copper contract traded at a premium of nearly USD63 over the three-month forward, up from USD53.50 on Friday, signaling tight near-term supply. Other base metals in the LME complex saw modest gains, with aluminium rebounding after hitting a three-month low, zinc edging up, and nickel and tin posting slight increases.