Copper price drops to 9-month low, but what about strikes?

The price of copper succumbed to renewed weakness on Thursday crashing through the $3.00 a pound level in New York in brisk trade with over 1.2m tonnes of September copper worth $8 billion exchanging hands by lunchtime.

Copper touched its lowest since the beginning of October last year in morning trade at $2.9515 or $6,507 a tonne on the Comex market, down more than 11% or $770 a tonne since hitting four-year highs three weeks ago.

A strong dollar and worries about the impact of a trade war between the US and China, responsible for half the world's consumption of copper and other base metals, is behind the recent pullback.

Softening demand is also combining with strong supply growth this year to cloud the outlook for the orange metal. Last week, industry body ICSG estimated world copper mine production rose 7.1% or by 330,000 tonnes during the first quarter of this year.

The rise was mainly thanks to higher output at the world's largest copper mine by a long stretch, Chile's Escondida, where a 44-day strike in February-March last year crippled production.

Labour action in Chile and Peru was flagged at the beginning of the year as a catalyst for a higher copper price in 2018, but so far talks have been uncharacteristically smooth, with most agreements reached during early negotiations.

However, the strike at Escondida ended without a contract and deadlines to make a deal were pushed out to the end of this month.

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