Key Takeaways
- Copper prices climbed to their highest level in three weeks.
- Supply concerns in Chile, including work stoppages and potential strikes, are driving prices.
- Investors are watching US inflation data and interest rate expectations for further guidance.
Copper prices have reached their highest level in three weeks, rising to $14,630 a metric ton on the London Metal Exchange. This increase was driven by supply concerns, particularly in Chile, one of the world's top copper producers.
The situation in Chile has been complicated by a week-long work stoppage at the Centinela copper mine and two striking unions, which have returned to the negotiating table. Additionally, state miner Codelco has partially suspended operations at its El Teniente mine due to a fatal landslide, adding to supply uncertainties.
The possibility of a strike at BHP’s Escondida copper mine, the world’s largest, has also been supporting prices, although two sources reported that a preliminary agreement had been reached between the supervisor’s union and company representatives.
StoneX senior metals analyst Natalie Scott-Gray highlighted that copper supply risks were skewed to the upside, especially considering the potential impact of El Nino on mine production. She also noted that the copper-gold ratio breaking down was underpinning prices, indicating a geopolitical risk premium.
Investors are closely monitoring the release of the US consumer price index for September, which could provide insights into future US monetary policy. Money markets suggest a roughly 20% chance of a Federal Reserve interest rate hike this month, which could influence industrial metal prices.
Other metals in the market also showed mixed performance. Aluminium prices fell 0.9% to $3,013 after hitting an eight-month low, while zinc gained 0.4% to $3,747. Lead added 0.1% to $1,904, nickel nudged up 0.5% to $15,670, and tin fell 1.7% to $50,900, its lowest since July 1.
Copper supply risks were skewed to the upside, especially with El Nino and its potential impact on mine production.
Natalie Scott-Gray, StoneX senior metals analyst
