Copper Pulls Back as Dollar Strengthens
February 21 2017 - 6:24AM
Dow Jones News
By Katherine Dunn
LONDON--Copper prices drifted lower Tuesday as a stronger dollar
and profit-taking weighed on the metal, even as supply disruptions
continued in Chile and Indonesia.
The three-month London Metal Exchange copper price was down
0.30% at $6,053 per metric ton in midmorning trade in Europe.
On Tuesday, the WSJ Dollar Index was up 0.43%. A stronger dollar
makes the metal more expensive for buyers who hold other
currencies.
Traders in the U.S. also return to the market on Tuesday, after
markets were closed on Monday for Presidents Day. Trading Tuesday
before the U.S. returned was light.
However prices are still "fairly well supported" by supply
problems including a strike at the Escondida mine in Chile, said
Liz Grant, an analyst at Sucden in London. Going forward, "if that
strike starts to ease, you'll see a knee-jerk to the downside."
Freeport-McMoRan Inc.'s Grasberg mine has also seen disruptions
over the terms of its export license, and another potential dispute
at a second Chilean mine has raised further supply worries.
Anglo American PLC said it would suspend operations at its El
Soldado copper mine in Chile after it didn't receive regulatory
approvals for a redesign. While the mine is a fraction of the size
of the Escondida mine, the freeze adds another ingredient to a
market that has seen constant supply worries so far this year.
On Tuesday, mining giant BHP Billiton Ltd. said it would review
its copper guidance for the 2017 fiscal year due to the strike at
its Escondida mine. In a call with reporters after the company
reported its latest earnings, BHP's chief executive said talks had
also restarted between the mine's union and management.
Union workers at the Escondida mine have been on strike since
Feb. 8, after government mediation between the union and management
over benefits and pay broke down. The mine produces roughly 5% of
the world's copper.
In Indonesia, Arizona-based Freeport-McMoRan Inc. is at
loggerheads with the Indonesian government over the terms for
granting the company's Grasberg copper mine an export license. The
company has said it would consider going to arbitration if the
issue isn't resolved in the next 120 days, and the government has
said it could also bring Freeport to arbitration.
The other base metals were largely lower on Tuesday. Aluminum
was down 0.45% at $1,892.50 per metric ton, lead was down 1.04% at
$2,292 per ton, zinc was up 0.10% at $2,883 per ton, nickel was
down 0.45% at $11,105 per ton, and tin was down 0.05% at $19,850
per ton.
Biman Mukherji, Rhiannon Hoyle and Sara Schonhardt contributed
to this article.
Write to Katherine Dunn at Katherine.Dunn@wsj.com
(END) Dow Jones Newswires
February 21, 2017 06:09 ET (11:09 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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