While the stronger US dollar and worries about the stability of the Turkish economy and currency dominated markets last week – copper was again on notice because of growing concerns about more industrial action at BHP’s Escondida mine in Chile we warned about last week.
Copper prices fell on the LME and Comex on Friday (thanks to a stronger US dollar) despite the workers’ union at Escondida, saying BHP (Rio Tinto is a minority owner) must change its negotiating stance and improve its contract offer during a final phase of talks if it hopes to avoid a strike.
As well, Reuters reported that the main union at Lumina Copper’s Caserones in Chile mine claims a last round of labour negotiations had broken down and that a strike was imminent.
"The last negotiating period (at Escondida) is fast coming to an end, with the two parties still far apart. This should see operations impacted in the not too distant future,” ANZ wrote in a note.
BHP Billiton last week requested five days of government-mediated talks as it seeks to end this pay dispute.
Workers has rejected BHP’s final wage offer and approved industrial action, but under Chilean labour law either party can ask for five days of government-brokered talks, which will start later Tuesday.
If there is no agreement, a strike will begin tomorrow, August 14, although negotiations could be extended by another five days if both parties agree.
A 44 day strike last year cut production from the mine and sent world prices higher. The current dispute is a renewal of that dispute which was pushed out a year to try and give both parties time to settle.
Copper has also received a boost from China’s move to impose a 25% import tariff on scrap copper from the United States, one of its biggest suppliers of the material. “ his is likely to see China importing more refined metal,” the ANZ added.
Comex September copper in New York fell 2.3 cents, or 0.8%, to $US2.7425 a pound. For the week, copper lost 0.9%.
Three-month copper on the London Metal Exchange ended at to $6,190.50, down a touch on Friday.
Three-month aluminium on the LME was up 0.7% at $2,083 a tonne, after ending down 1.3% the previous session on profit-taking.
Gold futures on Friday finished with a loss for the day and the week, as the sharp jump in the US dollar (up 1.5% over last week) overshadowed growing worries that an escalating currency crisis in Turkey would spill over.
Comex December gold fell 90 cents, or less than 0.1%, to settle at $US1,219 an ounce. It traded as low as $US1,213.10 and as high as $US1,224.90 intraday. The contract was down 0.3% for the week.
Comex September silver fell 16.7 cents, or 1.1%, to $US15.295 for a 1% fall for the week.
