Copper prices have been skyrocketing throughout this week, as the beginning of wage negotiations raise fears of another fall in supply at Escondida in Chile; the world’s biggest copper mine. Last year saw significant disruption at this mine, having a substantial impact upon the price of copper as a whole. A 40-day strike in March and 24-hour strike in November have done little to resolve long-term issues with workers at the plant. The 40-day strike was only resolved with an agreement to extend the previous contract by 18 months. With that contract expiring in August 2018, the resumption of those divisive negotiations is back on the cards, helping drive uncertainty over supply implications.
With copper prices up 5% this week, there has been a clear response from markets after weeks of consolidation. The precious metal is typically seen as a gauge of economic health, and thus this could also be perceived as a response to rising world growth. The threat of tariffs on aluminium and steel are also likely to be playing into market sentiment.
Looking at the weekly chart for copper, we are trading back at the crucial 7313 level, which is going to set us up for the coming weeks and months. Initial signs point towards a bullish breakout, which would subsequently provide us with expectations of further near-term upside. Utilising the Andrews’ pitchfork indicator, there has been a clear return to the upper threshold of the pitchfork. A break through this 7312 level would therefore point towards that line as a guide of where we expect the price to travel, as we move forward without any resolution.