Strikes raise metal prices
Strikes raise metal prices
LONDON (AFP): Strikes in several copper and nickel mines around the world sent a shiver of excitement through the market, which was still awakening from a sleepy summer, and drove the price of these metals higher last week.
Some traders fear that the stoppages at copper mines in Chile and Namibia will cut into world production, which was expected to expand strongly later this year.
A walk-out at a nickel mining complex in Canada also threatens to reduce output of this key metal, used to make stainless steel.
Strike action in several mines around the world has prompted fears on the London Metal Exchange (LME) of a disruption to global supplies.
Prices, as a result, have been driven higher. Three-month copper prices rose by US$30 to $1,965 per ton.
The main source of concern is in Chile, where employees at the state-owned Codeldo's Salvador mine stopped work from Friday, in protest at a management restructuring plan.
Salvador, with an annual output of 85,000 tons a year, is the smallest mine run by Codelco, which is the world's biggest copper producer.
The market fears that the stage is set for a long strike, with the management apparently determined not to give way in the dispute.
Strike action has also put the Tsumeb smelter in Namibia out of action. The owner, Gold Fields, has admitted that there might be a lengthy shutdown.
Another dispute could take place at a mine in New Mexico owned by Phelps Dodge, where unions are resisting the latest management pay offer.
Analysts, however, are divided on the impact of these labor disputes. Some say that the copper market is swiftly moving towards a period of large surpluses (because of rising production) and the strikes will have a minimal effect.
But other experts believe the loss of output could delay the arrival of these growing surpluses.
An increase in US construction activity helped prices to firm. Copper is used a lot in the building industry, to make pipes and cables.
At the end of the week, a smaller-than-expected rise in LME stocks (up 3, 600 tons to 275,275 tons) gave added impetus to the market.
Nickel prices were hard. A vote in favor of strike action at the Thompson mining complex in Canada owned by the giant Inco company drove up the price of this metal, used to make stainless steel.
The three-month reference price gained $100 to reach almost $7,500 per ton. Traders fear that the shutdown of this complex in Manitoba, which produces 45,000 tons of nickel a year, will affect supplies on the market.
The price of tin rose by $80 to $6,240 per ton, with LME stocks up 20 tons at 10,725 tons.
According to the Economist Intelligence Unit, consumption of tin will grow strongly in the next few years, after the decline seen in past years, as tin is increasingly used once again to make drink cans.