Copper prices were also supported by supply concerns caused by rough weather in Chile and labor issues in Indonesia.
Copper prices rallied on Thursday (June 8) after economic data from China showed better-than-expected import and export numbers for May.
Last month, exports grew 8.7 percent in dollar terms, while imports climbed 14.8 percent. That suggests that the Asian country’s economy might be stronger than estimated by analysts. Data also shows that refined copper imports increased by 30 percent in May, coming in at 390,000 tonnes compared to the previous month.
“The copper imports rebound in May is more than markets expectations, especially in the offseason for copper, pointing to the markets had overestimated the slowdown in China’s economic growth and the sluggish domestic demand,” Argonaut Securities analyst Helen Lau told Bloomberg.
Although it remains far from the 21-month high it high in February, LME copper enjoyed its biggest one-day rise since April 5 on Thursday. It closed up 1.9 percent at $5,729 per tonne.
Copper prices were also supported this week by supply concerns after the largest copper mines in top producer Chile closed due to weather conditions. Heavy rains and snow at higher altitudes in the country’s Antofagasta region reduced output at BHP Billiton’s (ASX:BHP,NYSE:BHP,LS:EBLT) Escondida mine, Codelco’s Chuquicamata operation and Antofagasta’s (LSE:ANTO) Zaldivar project, among others.
“Those mine disruptions in Chile are the major supply-side news this week,” Xiao Fu of BOCI Global Commodities told Marketwatch.
In addition, labor issues continue at Freeport-McMoRan’s (NYSE:FCX) Grasberg mine in Indonesia. The dispute at Grasberg has lasted over five weeks, and escalated on Wednesday (June 7). The company said 3,000 workers failed to return after being asked five times; it now considers them to have resigned.
“Production is not at an optimum level because there are a lot of absentees,” spokesman Riza Pratama said. “We’re thinking of how” to replace the workers, he added. Analysts at JPMorgan (NYSE:JPM) have called the challenges at Grasberg, the second-largest copper mine in the world, the biggest threat to global copper supply.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.