Sunday, June 19, 2022

"Copper price extends decline despite possible Chile strike"

Oh come on. It was almost exactly five months ago (January 18) that yours truly was thinking:

"Copper supply in 2022 – eyes on Chile, Peru, DRC"
Before we get into the meat of this article there is something going on in copper that may interest folks on the long side. All day today, as U.S. equities were getting whacked the world's third or fourth largest producer (it depends on the kind of month Glencore is having) the third or fourth largest producer, Freeport-McMoRan (FCX), was trading in the green while U.S. copper futures were only off a few pennies as the dollar showed impressive strength and the 10-year note showed impressive weakness, two occurrences that one might infer to be negative to the red one, but no. FCX is a pretty good leading/coincident indicator of sophisticated speculator sentiment in copper.

And now as I type the front futures are up 0.0305 at 4.4130.

Just to be clear, we are intermediate-term bearish on the metal, thinking we will trade under $4.00 before the real fun begins on the long side but in the immediate-term it appears long ain't wrong. Something's up.....

And having to suffer on the sidelines a quick trip to $5.00 when Russia invaded Ukraine and China appeared to be turning their foreign exchange reserves into storables, from grains to gold to cupric, we finally, finally tonight gap-down to 3.9760 and instead of contemplating how and when to go long, the Return of Red Kite* etc. we have to think about a strike at Co-effin'-delco. 

TradingView Chart

 CME via TradingView

Two from Mining.com, first up June 17:

The copper price extended its decline on Friday despite the prospect of a strike in the world’s biggest producer Chile and signs of improvement in top buyer China’s economy.

Copper for delivery in July fell 2.5% from Thursday’s settlement, touching $4 per pound ($8,800 per tonne) Friday morning on the Comex market in New York.

The union said that workers at Chilean State-owned Codelco, the world’s largest copper producer, will go on strike if they do not receive a favourable answer from the company’s board of directors. 

The union has insisted that Ventanas, in the central zone of the country where the smelter is located, needs $53 million worth of capsules to retain certain gases, allowing operations to continue while being environmentally compliant....

....MUCH MORE

And June 19:

Codelco unions ready strike after troubled Chile smelter shuttered

Workers at Chilean state-owned miner Codelco, the world’s largest copper producer, said on Saturday they will start preparations for a national strike after the firm announced the closure of the troubled Ventanas smelter....

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