Copper climbed to its highest in three weeks on Wednesday, aided by supply concerns in top producer Chile, as investors awaited the release of US inflation data.
Benchmark three-month copper on the London Metal Exchange rose 0.4% to $14,630 a metric ton in official open-outcry trading. It earlier rose to $14,695, its highest since September 23 and not far from the all-time peak of $14,875 struck last month.
Chile’s Centinela copper mine and two striking unions returned to the negotiating table on Tuesday, aiming to resolve a week-long work stoppage that workers say is affecting operations, while state miner Codelco has partially suspended operations at its El Teniente mine after a fatal landslide.
The possibility of a strike at BHP’s Escondida copper mine, the world’s largest, has been supporting prices, but two sources told Reuters on Wednesday that the supervisor’s union and company representatives have reached a preliminary agreement.
StoneX senior metals analyst Natalie Scott-Gray said copper supply risks were skewed to the upside, especially with El Nino and its potential impact on mine production, while investor bets on the metal were also keeping prices elevated.
“I would say the copper-gold ratio has actually broken down, and that’s kind of highlighting that copper’s got its own geopolitical risk premium and that is what’s underpinning those prices,” Scott-Gray said on an LSEG webinar.
The copper-gold ratio is a gauge of whether investors are favouring risk or caution.
Traders were awaiting Wednesday’s release of the US consumer price index for September, which could provide clues as to future US monetary policy.
Money markets show traders are attaching a roughly 20% chance of a hike from the Federal Reserve this month. Higher interest rates tend to weigh on industrial metal prices.
Aluminium shed 0.9% to $3,013after hitting an eight-month low of $3,009, as Citi cut its near-term aluminium price forecast to $3,000, citing a loosening market balance.
Zinc gained 0.4% to $3,747, lead added 0.1% to $1,904, nickel nudged up 0.5% to $15,670 and tin fell 1.7% to $50,900, after hitting its lowest since July 1.