LONDON, July 25 (Reuters) – Copper held at two-week highs on Wednesday as the dollar weakened and as the market awaited a resolution to wage talks at the world’s largest miner of the industrial metal. The possibility of a strike at BHP’s Escondida mine pushed benchmark copper prices in London to a near 4-1/2 year high of $7,348 a tonne on June 7, before fears that a U.S.-China trade war could crimp demand pushed the price below $6,000 tonne last week. LME copper inched 0.1 percent lower at $6,285 per tonne by 1036 GMT, after the metal used in power and construction jumped the most since January on Tuesday. “Its not a done deal yet,” said Aneeka Gupta, associate director at ETF Securities, referring to the outstanding wage deal at Escondida. “If the offer is rejected the company will then hold five days of government-mediated talks and that could also be extended. The price today is a reaction to the waiting period.”
ESCONDIDA: The world’s largest copper mine, Escondida, on Tuesday made a final offer in talks with the union representing its rank-and-file workers that includes a beefed up contract signing bonus and a 1.5 percent increase in wages.
CHINA STIMULUS: Beijing vowed on Tuesday to pursue a more ‘vigorous’ fiscal policy, including cutting taxes, as authorities stepped up efforts to support growth amid rising economic headwinds.
The move would boost demand for copper and other metals in the world’s top consumer, China, analysts say.
DOMINANT POSITION: Copper prices have been underpinned by a large position controlling 50-79 percent of available LME copper inventories, according to LME data.
SUPPLY: Antofagasta on Wednesday reported a 6.1 percent increase in second-quarter copper production and a fall in costs, a trend the miner said would to continue for the rest of the year.
ALUMINIUM STOCKS: The amount of cancelled aluminium inventory — stock earmarked for delivery — rose 23,175 tonnes, mainly from Busan, taking on-warrant stocks to 939,975 tonnes.
ZINC: Morgan Stanley said zinc was oversold in the first half of the year but is expected to rebound in the remainder of the year due to its deficit and because the peak demand season is about to start. “Zinc’s been hardest hit by the sell-off due to its exposure to tariff-hit autos and machinery, and a fundamental outlook that points to a return to balance in 2019,” the bank said.
LME zinc dipped 0.4 percent to $2,603.50 after rising 2.4 percent in the previous session.