Metals rally with oil as copper boosted by Chile mine closings
By Bloomberg
Industrial metals rallied with oil after Saudi Arabia bombed targets in Yemen and copper extended gains to the highest price in almost three months after rains in top producer Chile forced mines to close.
Crude oil climbed to the highest in more than two weeks in London amid concerns the Middle Eastern conflict may intensify and spread. Higher energy prices lift mining output costs. Copper miners including Codelco, the world’s biggest producer, shut operations in the Atacama Dessert as rains in northern Chile closed roads and flooded towns.
Analysts at institutions including Bank of America Corp. have this year curbed expectations for copper supplies amid production disruptions stretching from Zambia to Australia.
“We’re going through a period in the copper market where disruptions, outages, strikes are all just a little bit more problematic,” Nic Brown, head of commodity research at Natixis SA in London, said by phone. “The weather conditions in Chile are clearly affecting output.”
Copper for delivery in three months on the London Metal Exchange rose 1.8 percent to $6,234.50 a metric ton at 11:35 a.m. after reaching $6,294.50 earlier on Thursday, the highest since Jan. 2. On the Comex in New York, copper for May delivery gained 1.7 percent to $2.8405 a pound. Futures trading volume was 22 percent higher than the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
Industrial metals also rallied as the U.S. dollar reached the lowest in three weeks. A weaker dollar boosts demand for greenback-denominated commodities as an alternative investment. Zinc climbed as much as 2.3 percent, the most since Jan. 26, while aluminum gained as much as 1.8 percent.
Air Strikes
“Industrial and precious metal prices are up this morning on a weaker dollar, driven by higher oil prices due to perceived supply risks in the Middle East,” Jessica Fung, an analyst at BMO Capital Markets, said in a note.
Saudi Arabia led a coalition of 10 Sunni-ruled nations in air strikes against Yemen’s Shiite Houthi rebels as it seeks to stop the spread of Iranian influence on its southern border.
In Chile, the rains also forced Lundin Mining Corp. to close its Candelaria mine and Pan Pacific Copper Co. to shutter Caserones. Antofagasta Plc said its Michilla and Centinela mines were closed, while its biggest mine, Los Pelambres, continued to operate.
Also on the LME, lead climbed 1 percent, while tin and nickel were little changed.