Copper Prices Unfazed by Chilean Strike Threat

Strategic Insights -

Market sources say the threat of a strike at Codelco, the world's largest copper producer, has been largely priced into the market, leaving copper prices nearly flat despite record highs. The strike, which involves 20,000 unionized workers, is centered around a bonus demand of 500,000 Chilean pesos ($973) for contracted workers. Despite the tense situation, copper prices on the Comex division of the New York Mercantile Exchange and the London Metal Exchange (LME) have continued to trade near record highs, with three-month copper reaching a record high of $4,515.00 per metric ton on the LME.

Key Takeaways:

  • Copper futures on the Comex division of the New York Mercantile Exchange have failed to react to ongoing news of a possible strike at Codelco, the world's largest copper producer.
  • The strike involves 20,000 unionized workers who are seeking an extra bonus of 500,000 Chilean pesos ($973) for contracted workers.
  • Market sources say the threat of strike has been largely priced into the market, leaving copper prices nearly flat despite record highs.
  • The London Metal Exchange (LME) saw three-month copper reaching a record high of $4,515.00 per metric ton on the LME.
  • Jim Quinn, a commodity floor analyst with AG Edwards in New York, stated that the market seems to have discounted the labor issue in Chile and is moving on its technicals.
  • Tom Boustead, analyst with Man Global Research, expects a bounce in New York if the strike does move forward, but notes that due to the time of the year, he does not expect much trading off it.

Statistics:

  • 20,000: the number of unionized workers involved in the strike at Codelco.
  • 500,000 Chilean Pesos: the amount demanded by contracted workers as an extra bonus.
  • $4,515.00: the record high price of three-month copper on the London Metal Exchange (LME).
  • $2.0720: the fresh contract high of Comex copper futures on December 28, 2005.
  • 973: the equivalent value of 500,000 Chilean Pesos in US Dollars.

Sources:

  • Dow Jones Commodities News via Comtex, "Copper Futures Fail to Bounce on Strike Threat" (Dec 28, 2005)
  • Tom Boustead, Man Global Research, quoted in Dow Jones Commodities News via Comtex, "Copper Futures Fail to Bounce on Strike Threat" (Dec 28, 2005)
  • Jim Quinn, AG Edwards, quoted in Dow Jones Commodities News via Comtex, "Copper Futures Fail to Bounce on Strike Threat" (Dec 28, 2005)