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Copper leaps to near 2-year high as mine strike kicks off

Copper prices leaped more than 4 percent Friday after a strike at the world's largest copper mine raised expectations of tighter supply.

Workers at BHP Billiton's Escondida mine in Chile walked off the job Thursday in a wage dispute and are building a campsite right outside the mine, Reuters reported. The newswire also said the workers' union has stockpiled supplies and provisions for 60 days.

Copper futures contracts for March delivery hit a session high of $2.771 a pound, the highest since May 29, 2015.

With gains of nearly 4.4 percent midday Friday, the metal was tracking for its best day since Sept. 8, 2015. Copper is up more than 5.5 percent for the week.

Copper prices 5-year performance

Source: FactSet

The metal had already been on the rise ahead of the planned Escondida strike. Processing plants began going offline Wednesday and have completely stopped, the union told Reuters.

Separate issues at the world's second-largest copper mine in Indonesia also look set to hit production, and analysts expect the disruptions to reduce the global supply of copper by about 8 percent.

Traders also eyed overnight news from China, the world's largest consumer of the metal, to gauge the future balance of supply and demand.

China reported January trade figures that were strong overall but showed a sharp drop in copper imports from December.

"This slowdown in copper imports signals waning demand in the face of increasing rates and slower manufacturing," Bart Melek, global head of commodity strategy at TD Securities, wrote in a Friday note.

"These numbers provide further evidence that if the supply disruptions at the two largest copper mines do not last long term, then there is little reason to justify the extreme spec length and prices between $5,800-6,100 /t (~$2.63 - $2.67 /lb.), and we expect a reversal towards $5300/t ($2.40 /lb.)," Melek said.