If I was a copper miner, I would be rubbing my hands because copper prices are looking healthy as a horse.
Workers at Cerro Verde mine in Peru walked out on Friday, “halting output of 40,000 metric tons per month in a dispute over labor conditions,” according to news.com.au (here’s a video interview and analysis I did about it for Swiss Financial Television). The strike stretched into its fourth day yesterday after a meeting between the union and management failed to resolve it on Monday. “The mine is currently making about half as much copper as it normally does, because owner Freeport-McMoran hired contract workers to operate key areas,” said a union official as quoted by Reuters.
On top of this, disruptions at the world’s two largest copper mines, Escondida in Chile and Grasberg in Indonesia, are causing them to “lose production daily due to a strike and an export ban respectively,” according to Reuters.
The Technical Picture
The technical picture is important because it tells a lot about what buyers and sellers are doing. Copper rose nearly 30% in November. Usually, after such a huge run it’s normal to see some selling but we haven’t really seen that yet.
Since November, prices are holding pretty well and that’s a sign that bulls are still in control. A sharp price decline in oil prices last week would normally bring other commodities down but copper held its ground well. The red metal continues to make higher highs and higher lows, a textbook definition of a healthy uptrend.
What This Means For Metal Buyers
The diagnosis is that while copper’s bull market doesn’t show real signs of weakness, we continue to expect further upside moves. Buyers should keep an eye on the ongoing supply disruptions because they could hurt your budget.