By Jim Williams
Copper prices posted big gains in early morning trading Wednesday as workers at the world’s largest copper mine say they will go on strike tomorrow. What was just a threat last week appears to be reality today as talks have ended. Miners at the BHP Billiton-controlled Escondida mine say they have no choice.
“The company doesn’t want to change its position, so we understand that there is nothing left to negotiate … there is nothing left to talk about, we’ve already talked a lot and we are definitely going on strike,” said union spokesman Carlos Allendes.
BHP said it could not guarantee the safety of the 80 workers the Chilean government had authorized to remain at the Escondida mine to perform “critical duties” like equipment upkeep and adherence to environmental protocols.
The mine produces five percent of the world’s copper.
The pending strike shot the spot price of copper up around $2.65 a pound early this morning. It was at $2.51 a pound a month ago.
Picture from www.mining-journal.com
Other Copper News
The miners’ strike in Chile is not the only thing keeping investors preoccupied this week. China hit the ground running as the country returned from the New Year’s break, as their central bank raised short-term interest rates on the first day back from holiday.
“The higher rates basically indicate that, this year, controlling excessive financial risk has become a top priority of the authorities,” said Xiao Fu, head of commodity market strategy at Bank of China International in London.
China’s PMI grew for the seventh consecutive month.
Politics is also a factor for the markets. Headlines from Washington will continue to dictate the market as traders focus on the Trump Administration for further details on promises of tax reform, infrastructure spending and deregulation as well as trade policies.
The U.S. isn’t alone – France is on the radar as far-right National Front leader Marine Le Pen launched her presidential bid over the weekend, vowing to fight globalization and take France out of the euro zone. There are elections in other parts of the European Union this year as well – Dutch elections are in March followed by Germany in September. Another presidential election is on the horizon for Italy as well.
Still More News
The Fed, which raised rates in December, has forecast three rate increases this year. Investors, like tED contributor Andrew Hecht from Seeking Alpha, remained unconvinced.
“When the Fed announcement came last week, it was almost a non-event as there are so many other issues that are moving markets all over the map these days'” says Hecht. “I did pause to hear the Fed announcement and when they told markets that rates are remaining unchanged at 50-75 basis points I yawned. The news came as no surprise.”
Further Reading
Market analysis from Market Miner.
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