London Metal Exchange copper sagged to a six-month low Wednesday after news of an end to a strike at Xstrata's Altonorte smelter and that two unions at Codelco's contract negotiations have accepted final offers, traders said.
LME three-month copper started its descent from mid-morning after stocks rose by a net 4,600 metric tons to 177,225 tons.
"Copper was undermined by the receding threat of strikes in Chile with news overnight that workers at the Altonorte smelter had ended their strike and unions at Codelco Norte were less likely to strike following their acceptance of a new contract offer," said Robin Bhar of UBS.
Codelco's Calama No. 1 union, which hasn't yet signed a new labor contract, representing some 2,800 workers, was scheduled to hold an assembly Tuesday evening to discuss an offer.
Copper cracked support at $6,500/ton by mid-afternoon to briefly trade below at $6,495/ton. However, the close above this major trendline should help prices to build a base, one trader said.
"$6,500/ton has been touted as a big number, but since we managed to close above it, that should help us a little Thursday," a trader said.
Easing supply concerns and flagging demand in the U.S. will continue to weigh on prices going forward, traders said.
Copper's flagging performance dragged down other LME traded contracts.
LME lead fell as much as 2.6% on the previous PM kerb and zinc found itself pressured down 1.9%.
Thinning liquidity in the week before the Christmas holiday has left traders wary of erratic performance, and expecting further year-end liquidation to weigh on the market.
Thursday will bring U.S. third-quarter gross domestic product data, expected up 2.2% and Friday the release of November durable goods data.
3 months metal (prices in dollars a ton)
Bid – Ask, Change from Tuesday PM kerb
Copper 6525.00-6530.00 Dn 139.00
Lead 1605.00-1610.00 Dn 28.00
Zinc 4220.00-4230.00 Dn 90.00
Aluminium 2772.00-2773.00 Dn 31.00
Nickel 33600.00-33700.00 Dn 800.00
Tin 11125.00-11175.00 Dn 130.00
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