London copper hit its highest levels in 20 months Monday as closures of two of the world’s biggest mines amplified concerns of a supply shortage.
In early trading Monday, the three-month London Metal Exchange contract rose 0.10 percent to $6,097 per metric ton, its highest level since May 2015 and a continuation of the upwards trend seen since last week, when production was halted at two key sites.
Miners in Chile’s BHP Billiton site, the world’s largest copper mine, last week walked out over a wage dispute, prompting the firm to announce Friday that it would not meet its upcoming contractual obligations on metals shipments. Meanwhile, an export ban has caused Freeport-McMoRan to cease work in Indonesia after it failed to reach an agreement on a new mining permit with the government.
Prices leapt 4.4 percent Friday as tensions heightened, taking the metal to a 17-month high.
Since then, Reuters reported over the weekend that more than 300 vandals broke into property at BHP Billiton and forced contracted workers to stop working, causing the metal to rise to $6,204 a tonne in volumes of around 8,000 lots in Asian trading Monday.
But does this signal the start of a chain reaction for base metals or, rather, does it say precious little?
According to a press note from Kit Juckes, macro strategist at Societe Generale, it’s a sector worth watching, “given the tendency for commodity prices to correlate.”
