Copper extended gains Monday, rising as much as 0.6 percent before settling 0.5 percent higher at $14,618 a ton on the London Metal Exchange by 11:54 AM Singapore time, after gaining almost 2 percent last week. Falling oil prices fueled some optimism that central banks could hold off on further rate hikes, a macro tailwind for non-yielding commodities, as investors awaited mid-week US inflation data.
The supply side gave the sharper push. Two workers died Sunday after a snow avalanche struck Codelco’s giant El Teniente copper mine in Chile, where open-pit operations had already been halted due to bad weather, and Codelco said it partly suspended the mine. The fatal incident lands on top of the strike at Antofagasta’s Centinela mine, where two unions walked out October 7 after government-mediated talks broke down, pulling 709 workers, about 22 percent of the direct workforce, off mining, haulage and development work.
The physical tightness is showing in China’s import market. The Yangshan copper premium, the extra cost to secure imported copper into China’s bonded warehouses, jumped to $135 a metric ton last week, its highest in four years, even as Shanghai Futures Exchange inventories rose 51.6 percent since end-September to 58,744 tonnes. On the LME curve, cash copper traded at a $169-a-ton premium to the three-month contract, a sharp reversal from an $86-a-ton discount a month ago, the classic sign of buyers paying up for immediate delivery. US copper futures climbed toward $6.70 a pound, near the record $6.80 touched a month earlier. Zinc rose 0.6 percent while aluminum was stable.