Onome Amuge
Copper rode into bullish territory on Wednesday, buoyed by supply disruptions at major mines and a weaker dollar, as traders weighed the potential for volatility in the absence of Chinese market participation during a week-long holiday.
Three-month copper on the London Metal Exchange (LME) gained 0.4 per cent to $10,307 a tonne in official open outcry trading, edging closer to the $10,500 technical resistance level.
Sucden Financial noted that Chinese markets, closed from October 1 to 8 for the National Day holiday, could leave price action vulnerable to swings, with sentiment tilted towards the upside. “Last week’s force majeure by Freeport-McMoRan at its Grasberg mine in Indonesia acted as an incentive to break away from rangebound conditions,” the brokerage said, though it cautioned that significant gains may be capped.
Potential strike action at Antofagasta’s Los Pelambres mine in Chile, following the rejection of a new contract offer by supervisors, added to supply uncertainty. Chile’s copper production fell 9.9 per cent year-on-year in August, its heaviest decline in over two years, after an accident at Codelco’s flagship mine curtailed output.
The supply-side pressures have coincided with a softer US dollar, which slipped to a one-week low against major currencies after Washington entered a government shutdown. A weaker dollar typically boosts demand for commodities priced in the currency by making them more affordable to non-US buyers.
Elsewhere in the base metals complex, aluminium firmed 0.3 per cent to $2,687.50 a tonne, zinc rose 0.2 per cent to $2,966.50, and lead added 0.3 per cent to $1,994.50. Nickel slipped 0.5 per cent to $15,160, while tin advanced 1.5 per cent to $35,950 after earlier touching $36,090, its highest level since April.
