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Copper Report: Mine Your Business

Copper Report: Mine Your Business

Copper prices slid Monday as investors keep an eye on labor talks at copper mines in Chile and India. The red metal opened this morning at $3.24 per pound. This after ending last week up 6.54%, hitting $3.30 a pound.

Benchmark copper on the London Metal Exchange ended down 0.8 percent at $7,255 a ton at the closing bell Monday. Last week, the metal touched $7,348, its highest since January 2014.

Talks with disgruntled miners at the Escondida mine in Chile appear to be heading to a resolution and hopefully no disruption in supply. The focus now turns to supplies from Vedanta’s copper smelter in India. The Indian state of Tamil Nadu ordered the permanent closure of the smelter after 13 people protesting to demand its shutdown on environmental grounds were killed last month. The smelter has the capacity to produce 400,000 tons of copper a year.

“(Getting) labor negotiators to agree to a new contract before the end of June is the big factor. Copper prices will unravel if there is no strike, back towards $6,900/$7,000,” Robin Bhar an analyst at Societe Generale told Reuters.

We will keep an eye on the situation. In the meantime, a softer dollar helped push the dollar during last week’s surge. A lower U.S. currency makes dollar-denominated commodities cheaper for non-U.S. firms, which could potentially boost demand for industrial metals like copper.

“Copper appears to be ready to make its next move in a bullish trend that began back in January 2016,” states frequent tED contributor Andrew Hecht of Seeking Alpha. “If the red metal moves above its December 2017 peak at $3.3220 per pound and to its next resistance level at the 2013 high of $3.4445 per pound, it will send a signal to the entire raw materials sector and to markets across all asset classes that inflationary pressures are rising, perhaps more than central banks believe,” adds Hecht. “Copper’s latest move could be telling us something significant about the state of the global economy, despite the current protectionist issues facing the world.”

The Week at a Glance

Yesterday’s meeting between President Donald Trump and North Korea’s Kim Jong-un appears to have been taken in stride on the stock market. We will keep track on reaction throughout the week. In the meantime, Investing.com has compiled a list of significant events likely to affect the markets.

Monday, June 11

The UK released data on manufacturing production.

Tuesday, June 12

Australia is to release data on business confidence.

The UK is to publish its monthly jobs report.

The ZEW Institute is to report on German economic sentiment.

The U.S. is to release consumer price inflation figures.

Wednesday, June 13

The UK is to publish data on inflation.

The U.S. is to produce figures on producer price inflation.

The Federal Reserve is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference.

Thursday, June 14

Australia is to produce its monthly jobs report.

China is to report on fixed asset investment and industrial production.

The UK is to release retail sales data.

The ECB is to announce its latest interest rate decision and hold a press conference.

The U.S. is to release reports on retail sales and initial jobless claims.

Friday, June 15

The Bank of Japan is to announce its latest monetary policy decision and hold a press conference.

The euro zone is to release revised inflation data.

Canada is to report on foreign securities purchases and manufacturing sales.

The U.S. is to round out the week with a report on manufacturing activity in the New York region, data on industrial production and preliminary data on consumer sentiment.

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Jim Williams

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