Crucial Updates: Copper Rally Is Clean Out of Market

Crucial Updates: Copper Rally Is Clean Out of Market

Mining strikes and other disruptions this year can not continue for Copper rally.

So far this year, strikes and work stoppages have occurred at three huge copper mines — including one lasting 43 days at the world’s largest, Escondida in Chile, managed by BHP Billiton . The outages have erased what was expected to be a surplus.

A rise in the copper inventories at the London Metal Exchange and in Shanghai, possibly arriving from unlisted storage facilities, is offsetting any shortfalls caused by the disruptions.

London Metal Exchange copper stocks are up about 20% since mid-February. Inventories at the New York Mercantile Exchange’s Comex unit are up by almost a third. Stockpiles at China’s collection of bonded warehouses have also hit the highest level since August.

Due to buildup of copper stockpiles following several years of oversupply, the metal is far from scarce. “The surpluses recorded in recent years mean that global stocks of refined copper are expected to remain above long-term average levels until around 2019.

Despite the hit to global output from the strike at Escondida, followed by another at Freeport-McMoRan’s (FCX) Cerro Verde mine in Peru, and disruptions at its vast Grasberg operation in Indonesia because of new regulations.

That is despite the hit to global output from the strike at Escondida, followed by another at Freeport-McMoRan’s (FCX) Cerro Verde mine in Peru, and disruptions at its vast Grasberg operation in Indonesia because of new regulations.

Of course, fresh disruptions to mines around the world could put more pressure on the market. Workers at the Peruvian operations of Southern Copper are threatening to strike, and there are more labor negotiations to come.

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