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Copper Prices Continue to Slide

What Impact Will Strike in Peru Have on the Market?

By Jim Williams

The U.S. markets are closed today in honor of Veterans Day, but that isn’t slowing down the news pertaining to copper.

The red metal fell slightly to close Monday down 0.74 percent to $6,615.75 a ton, extending a loss of 0.8 percent in the previous session. Copper prices have fallen 10 percent this year as slowing growth in top consumer China and expectations for new mine supply move the market into surplus for the first time in several years.

Also impacting the market is the fact that the dollar hit a seven-year high against the yen. This, after an official said Japan was likely to delay a planned sales tax increase because of the fragility of its economy. A strong dollar makes dollar-priced copper and other metals more expensive for European and other non-U.S. investors.

“For copper, we feel the fundamentals are weak,” states William Adams, an analyst at Fastmarkets.com in London. “Lower treatment charges are likely to lead to further increases in refined production, which could weigh on prices.”

Another unknown that could weigh on prices is yesterday’s news out of Peru that workers at Antamina Copper Mine – the largest copper mine in Peru – put down their tools and went on indefinite strike.

Officials at the mine say operations have been partially affected. Peru’s labor office has declared the strike illegal. It is unclear how long the strike will last and whether the disruption will help, or hurt, copper prices.

Peru as a whole produces 8 percent of copper production worldwide. “On a global scale, only about two to three percent of global supply comes out of Antamina on the copper side of things,” said Stefan Ioannou of Haywood Securities. “It’s still early. There’s no telling how long the strike will go on or how the conflict will develop.”

Whether the strike gets resolved quickly or whether it becomes a long, drawn-out affair will of course be key to how much the copper price gets affected.

Either way, copper investors will be watching closely to see what happens next – and so will we.

Please check back each week for the latest copper news. We will keep our thumb on the pulse of the industry and report what we find.

 

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