Copper hits two-month peak as dollar wilts

LONDON — Copper rose by 2.90% on Tuesday, touching a two-month high on concern over potential supply disruptions in Chile and a weakening dollar.

The dollar was on course for its worst start to a year since 2008 as concerns over the broader shape of policy under US President Donald Trump outweighed the expectations of higher US inflation that dominated the end of last year.

A weaker greenback makes dollar-priced metals cheaper for non-US investors.

“Eventually Trump’s policies could feed through to weaker metals prices, but for now the markets are seeing a weaker dollar and pinning their hopes on infrastructure investment in the US,” said Warren Patterson, commodities strategist at ING.

In lighter than usual trading because of the week-long Chinese Lunar New Year holiday, threemonth copper on the London Metal Exchange (LME) closed at $ 5,989 a ton, having hit a twomonth peak of $5,991.

Underpinning the metal, workers at Chile’s Escondida copper mine, the world’s largest, entered the final stretch of voting on Monday on the company’s wage offer. The workers’ union said it was confident a strike would be approved. “An imminent strike at Escondida may be the first of several labor disputes in the copper sector. Our models suggest a refined deficit this year (albeit a marginal 70,000 tons),” ICBCS Standard Bank said in a note.

The spotlight remains on copper supply woes, a JPMorgan note said, but it added that signs of softer demand have eased concerns somewhat. “Major Chinese and Japanese smelters are currently well supplied,” it said.

The bank expects spot copper treatment and refining charges ( TC/ RCs) to inch up to about $90/9.0c this quarter. Miners pay higher TC/RCs to smelters when demand is subdued.

Also tempering copper’s gains, Indonesia will temporarily exempt Freeport- McMoRan from some new rules while processing its application for new mining rights, potentially allowing for the resumption of copper concentrate exports.

In other metals, zinc closed 3% up at $2,860, having earlier hit a two-month high of $2,877. LME data showed zinc stocks at their lowest level since June last year.

Aluminum gained 0.90% to finish at $1,819, having hit a 20-month peak last week on talk of potential capacity cuts in China.

Lead ended 1.20% higher at $ 2,371, tin was up 0.80% at $19,825, having earlier hit its lowest since mid- October at $19,570, and nickel finished with a 3% gain at $9,955. —