(Bloomberg) -- Investors aren’t the only ones growing more bullish on copper.The confluence of factors turning producers into cash machines is also emboldening workers in Chile, raising the risk of stoppages in a hectic period of wage talks for the biggest copper-mining nation.An rare combination of surging prices and weak local currencies is swelling industry margins, which are also being aided by productivity gains during the coronavirus pandemic. Union bosses are taking notice.“Mining in Chile is more profitable now than for a long time, including during the boom,” Luis Redlich, president of one of the main unions at Antofagasta Plc’s Centinela mine, said in a telephone interview. “Under these conditions, there’s no excuse at all for workers not to get what they deserve.”Members of Redlich’s union rejected the company’s final wage offer on Monday, meaning they’ll walk off the job unless the two sides can resolve their differences in mediated talks. Last week, Lundin Mining Corp. agreed to pay a signing bonus of $23,000 to each worker to end a strike by the biggest unions at its Candelaria mine.Centinela and Candelaria are part of a slew of labor negotiations on the calendar in a nation that accounts for more than a quarter of the world’s mined copper. Next year, 31 contracts expire in Chile, according to BTG Pactual, including BHP Group’s giant Escondida mine that was hit by a 44-day strike in 2017.Read More: Rally May Reassert Copper’s Power Over Beleaguered Chilean PesoCopper has surged to the highest price in seven years amid China’s impressive economic recovery, and weak local currencies magnify the impact for producers. Unions also point to the sacrifices their members are making in the pandemic. Chile is producing at similar levels as last year with fewer workers, thanks in part to changes in shifts and rotations.In a presentation Tuesday, the Chilean government’s copper agency Cochilco said mining labor productivity rose 25% in the third quarter and 28% in the second quarter.Companies will be eager to avoid stoppages in a high-price, high-margin stage of the cycle and will be in a stronger position to grant union demands. Producers are still focused on keeping operating costs in check, given how expensive it’s getting to develop new mines in light of stricter environmental standards, BTG Pactual raw-materials analyst Cesar Perez-Novoa said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
For more crisp and insightful business and economic news, subscribe to The Daily Upside newsletter. Last week it was reported that thousands of dollars of copper wires were stolen from NYC subways. Copper prices have risen 25% this year, lifted first by coronavirus supply disruptions and then China's rapid pandemic recovery.
(Bloomberg) -- Copper extended a rally after capping the longest stretch of monthly advances in almost a decade, with prices headed for the highest close in seven years in London as China’s recovery continues and supply risks stack up.Caixin’s China November manufacturing purchasing managers’ index rose to the highest in a decade, according to data released on Tuesday. That’s the latest indicator highlighting the economic strength in the top metals consumer, after Monday’s official factory gauge beat market expectations and showed the nation’s economic rebound is gathering pace.With prices up more than 70% from an intraday low in March, this year’s rally is starting to resemble the spike in prices seen in the early 2000s as a surge in Chinese orders ushered in the start of the commodities supercycle, Luke Sadrian, chief investment officer at Commodities World Capital, said by phone from London.“This rally hasn’t even started yet,” Sadrian said. “The market’s looking like it did in ’04 and ’05, and the world didn’t get the memo.”Aside from the bullish fundamental outlook, hedging trades in the options market could add fresh fuel to the rally as December contracts expire on Wednesday, Sadrian said. There are a large number of call contracts outstanding at $7,800 a ton, and if prices breach that level, the dealers who sold them may end up scrambling to buy futures to cover their exposure.Copper started the month with further gains after an eighth straight monthly advance, its longest rally since 2011. The metal has surged on a wave of bullish drivers including a weaker dollar, vaccine optimism, and a global move toward low-carbon power sources. Risks of supply disruptions in key mining countries also tightened the market, with analysts warning of “unmanageable” global deficits in the coming years.Supply concerns were mounting on Tuesday after members of the Distrito union at the Centinela copper mine in Chile rejected owner Antofagasta Plc’s wage offer, drawing to a close regular collective bargaining and threatening a possible strike. Centinela produced 276,600 tons of copper last year, making it Antofagasta’s biggest mine after Los Pelambres.“Low inventory, a deficit market, a strong support from macroeconomic drivers are expected to send copper to fresh highs in 2021,” Morgan Stanley analysts including Susan Bates wrote in a note dated Monday. They forecast copper prices will rise through next year to average $7,716 a ton in the fourth quarter.Copper for three-month delivery rose as much as 2.2% and settled 1.5% higher at $7,694.50 a metric ton at 5:51 p.m. on the London Metal Exchange, the highest closing price in seven years. All base metals moved higher, with aluminum adding 1% and nickel rising 1.5%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.