Copper eases, but dollar, supply concerns support

Disruptions at world’s two biggest mines underpin prices

London copper edged down on Monday amid risk- off sentiment in broader markets, but supported by protracted disruptions at the world’s two biggest copper mines.

Asian shares were on the defensive on Monday as investors weighed the near- certain prospect of an interest rate hike in the US this month against news of slower growth in China this year.

Indonesia will not back down from new rules requiring Freeport- McMoran to divest a majority stake in its local unit, its Energy and Mineral Resources Minister Ignasius Jonan said late last week in a dispute over rights to the world’s second- biggest copper mine that has frozen exports.

Meanwhile, Chile expects economic activity growth to be hit by around 1 percentage point in February because of a strike at world No. 1 copper mine Escondida, as copper output slides 12 percent year- on- year.

“We expect copper to move into a deficit this year, the key drivers being a dramatically slowing rate of mine supply growth ... and a stabilizing demand picture,” Citi said in a report. “We do think we can see price peaks of close to $ 7,000 a ton this year.”

London copper was down 0.3 percent at $ 5,900 a ton by 3: 03 pm Beijing time, after closing slightly softer in the previous session.

Prices have been trading around $ 5,800-$ 6,200 a ton for most of the last month, having jumped to a 20- month top at $ 6,204 on February 13 after disruptions worsened at Escondida.

Shanghai Futures Exchange copper slipped by 0.5 percent to 47,890 yuan ($ 6,945) a ton.

The dollar declined from recent strength on profit taking, after the Federal Reserve’s long- stalled “liftoff” of interest rates looked to finally get airborne this year as policymakers from Chair Janet Yellen on Friday to regional leaders across the US signaled that the era of easy money is drawing to a close.

Elsewhere, the biggest conference for explorers and developers kicked off in Canada, with some industry experts predicting that recovering mineral and metal prices will further improve the fortunes of small miners.

Speculators cut their bullish position in Comex copper futures and options by 7,851 lots to 70,660 lots, US Commodity Futures Trading Commission data showed on Friday.