LONDON, June 4 (Reuters) – Copper prices rose on Monday, helped by a weaker dollar and potential supply problems as wage talks began at the world’s largest copper mine. The union at BHP’s Escondida mine in Chile said on Friday it had begun negotiations on a proposal that includes a bonus of about $34,000 per worker. That stirred memories of failed talks last year which led to a 44-day strike and pushed copper prices sharply higher. “The risk of an impasse is very high,” said ETF Securities analyst Nitesh Shah. Any interruption at Escondida would come on top of the closure of India’s second largest smelter after environmental protests. “Copper is likely to continue to trade higher,” he said. COPPER: Benchmark copper on the London Metal Exchange (LME) was up 0.7 percent at $6,945 a tonne at 1048 GMT after hitting $6,964.50, the highest since May 23. TECHNICALS: Copper has been stuck in a range between around $7,300 and $6,600 since hitting a four-year high in December. On Monday it broke above its 100-day moving average, improving its technical picture, and was poised to move above its downtrend line from its April high. POSITIONING: Positioning by speculative investors in LME copper was largely neutral, brokers at Marex Spectron said. SPREAD: The premium of three month copper over the cash contract MCU0-3 last week fell to $7.25, the lowest since March 2017, signalling tighter supply. “The spreads tightening is … likely related to jitters about (the) potential union negotiation in Chile,” a trader said. On Monday the premium had expanded to $13,75.
PERU COPPER MINE: China’s Chinalco said it had begun a $1.3 billion expansion of its Toromocho mine in Peru which it said would raise copper output by 45 percent by 2020. China’s official Xinhua news agency said Chinalco aimed to bring annual refined copper output to 300,000 tonnes. DOLLAR: Industrial metals received some support as a six-week rally in the dollar appeared to stall. CHINA DEMAND: China’s economic growth could slow to around 4.5 percent over the medium term, Fitch Ratings said, adding that it expected oil and metal prices to fall 5 to 10 percent from its baseline scenario because China is such a large consumer. OTHER METALS: LME aluminium was up 0.7 percent at $2,321 a tonne, zinc was 0.7 percent lower at $3,081.50, nickel was down 1.1 percent to $15,285, lead lost 0.2 percent at $2,438.50 and tin was down 0.9 percent at $20,575.
