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“Negative factors haven’t gone away, but the question is whether they have been fully priced in or if there more to go,” a copper trader said.
“On positioning, it looks like most longs (bets on higher prices) have been cut or reversed into shorts.”
“Macro numbers out of China have been a drag for a while now,” said ED&F Man Capital Markets analyst Edward Meir.
“The stronger dollar and the spreading Delta virus are additional negatives.”
Expectations the Federal Reserve will soon start tightening monetary policy have boosted the US currency which when it rises makes dollar-denominated metals more expensive for holders of other currencies, weighing on demand.
Worries about economic activity and demand around the world are rising alongside a spike in coronavirus cases around the world caused by the Delta variant.
Copper bonanza
Copper prices are tumbling just as miners in the top producing nation gird to fight for bigger bonuses, setting the stage for labor strife that raises the risk of supply disruptions.
Workers at several mines in Chile are being emboldened by surging company profits and a bumper bonus package agreed to last week at the giant Escondida operation.
The opposing factors create a tough environment for labor talks in a country that accounts for more than a quarter of global output and has a history of stoppages.
Mines that could be affected include Codelco’s El Teniente, El Salvador and Hales mines, as well as BHP Group’s Cerro Colorado and KGHM Polska Miedz SA’s Sierra Gorda.
(With files from Bloomberg and Reuters)
