Copper Hits 20-month High on Monday

Two of the largest copper mines remain in turmoil this week, causing concerns of a potential supply shortage. The news of a potential shortage helped copper rally on Monday, as London copper reached a 20-month high to start the week.

Copper reached $6,097 a metric on for its highest level since May 2015.

Chile’s BHP Billiton site suffered a walk out last week over wage concerns. The mine, the largest in the world, promptly released a statement on Friday that the mine will not be able to meet its contractual agreements.

Freeport-McMoRan operations in Indonesia were also disrupted after the mine lost its permit with the government. The precious metal rose 4.4% on Friday on the news.

Further disruptions in Chile are pressing BHP Billiton into additional delays. The company’s office came to a halt when 300 vandals broke into the property. The incident resulted in copper prices rising to $6,204 a tonne in Asian trading.

Commodity analysts suggest that the sector is worth watching in coming weeks, as commodity prices tend to correlate. A rise in copper prices may trigger a rise in other precious metals. Some analysts caution against a short-term rally.

The BHP Billiton mine remains the focal point going forward. Experts agree that the plant’s reopening will cause a reversal in prices.

Indonesian concerns are expected to continue longer than the issues in Chile. A short-term trend is expected to continue, as an export ban will cause the company to reduce operations. Data out of China further helped copper rally.

China’s exports and imports are on the rise, according to data from last week. The economic strength of the country is causing a boost to metal prices.

The BHP Billiton strike includes 2,500 union members threatening a 2-month walk out. New labor laws will go into effect in two months, strengthening the union’s cause. Chile’s economy is comprised of more than 50% copper exports. The strike will harm the country’s already-slumping revenues.

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