Workers at Chile's Escondida copper mine said last Tuesday that their union had decided to go on strike on November 21 and 23, Reuters reported. Data show that the copper mine is the world's highest annual output of open pit copper mine, accounting for 8% of the world's copper ore output.
On the other hand, Las Bambas, a copper mine in Peru, is operating at only 30% of its capacity because of blockades by nearby communities. The mine belongs to MMG, an overseas acquisition platform set up by Minmetals.
Since the two copper mines together account for a large proportion of the world's annual output, may have a certain impact on copper supply. However, market analysts said that the main reason for the tight supply and demand in the copper market for most of this year is not the mine end, but the smelting end, so the impact of the incident is limited for now.
Escondida, the world's largest opencast copper mine by annual production
Escondida is jointly owned by two of the world's biggest mining companies, BHP Billiton, which owns 57.5 percent of the mine, and Rio Tinto, which owns 30 percent, according to a Deutsche Bank report.
Escondida, where workers staged a record 44-day strike in 2017 that cost BHP $740 million, now produces nearly 1.1 million tons of copper a year.
According to foreign media sources, the strike was caused by what miners believe is non-compliance and breach of promises by BHP Billiton. In response, BHP said it had complied with safety standards and contractual commitments and that the strike was unjustified. "Escondida is operating in full compliance with laws and regulations and the current collective agreement, which is constantly monitored by the authorities. The Sindicato union's announcement of strong action is not justified."
Xu Keyuan, an analyst at Guangzhou Futures, said, "Overall, the main reason for the tight supply and demand in the copper market for most of this year is not the mine end, but the smelting end. On the one hand, the production of fine copper is not as expected. The cumulative production of SMM in the first 10 months of the year was 8,512,500 tons, an increase of 2.8%, or 232,800 tons. On the other hand, the continuous shortage of scrap copper leads to a substantial increase in the consumption of refined copper rod, and the long-term low copper inventory. So the impact of this event is limited for now. We need to pay more attention to the release of fine copper production and the supply of scrap copper."
Shanghai copper main even received 4 Yin, the day of capital outflow of 1.5 billion
At the time of writing, Shanghai copper main contract 2212 since the November 11 peak has fallen 3390 points, a decline of 4%, last Friday closed only one day positive, today closed at 65030 points, down 1.08%, the overall outflow of Shanghai copper funds reached 1.5 billion.
Meierya futures issued a document said, "From the macro level, the improvement of the expected slowdown is basically digested, the 50BP next month can not be lower, and we believe that the late game on the interest rate increase is no longer the main logic, pay attention to the actual downward inflation and economic downward speed and amplitude is more critical."
The report further pointed out that, from the fundamental point of view, the domestic weekly inventory of more than 20,000 tons, refinery supply has begun to volume signs, the subsequent supply increment is still relatively obvious, high prices on the domestic downstream inhibition is obvious, although the spot is still high premium, but the month-to-month basis difference quickly fell, the tension is greatly eased; Overseas, there are signs of weakening fundamentals, reflected in the LME lifted sanctions on Russian metal, European registered warehouse receipts continuously increased, spot premium quickly turned deep discount state, overall inventory slight accumulation. Macro expectations are caught in a tug of war, but the main logic has not changed, the fundamentals began to show some signs of weakening, but the low inventory pattern is still there, it is expected that with the verification of realistic data, the price pressure will gradually increase.
