2018 PREVIEW: Wave of labor negotiations puts global copper supply at risk

Labor negotiations at several of the world’s leading copper mines will increase supply risk in 2018 and could provide support to prices, market analysts said.

More than 30 labor contracts are due to be renegotiated next year - the largest number since 2010. This means that nearly 40% of global copper production - or more than 7 million tonnes - could be subject to disruption due to industrial action next year, according to Barclays. “This risk is largely concentrated in just two countries, Chile and Peru, and remains a crucial unknown factor for the market,” Barclays’ analyst Dane Davis said in a report. While strikes are unlikely at more than a handful of mines, such risk should “add a significant premium to prices, even if the Chinese economy materially slows,” Davis added. The average copper price on the London Metal Exchange in 2017 rose 26% year on year to nearly $6,150 per tonne. For 2018, Barclays forecasts the annual average copper price at $6,175 per tonne, with a "significant degree of volatility" throughout the year. Bank of America Merrill Lynch analyst Michael Widmer...

Published

Danielle Assalve

January 05, 2018

11:00 GMT

São Paulo