Commodities Comment:Copper mine strikes

Of the many newsworthy events that take place in the metals world, amongstthe most headline-grabbing are stories of industrial action. The implications ofpossible production outages attach a bullish undertone to the story for themetal markets, adding to its popularity and resulting in wide dissemination.

    However, as we digest the recent news of two major copper mine strikesplanned for November (at Antamina and Grasberg), we ask to what extentindustrial action disrupts output versus other less visible disruption types, andhow much price upside might a strike ultimately provide?

    Latest news。

    Hong Kong exported 91.7t of gold to China in September, according to customsdata released on Monday, the largest such flow since March 2014. It imported23.1t, meaning its net exports were 68.6t, also the highest since March and farahead of August’s 27.5t. This resurgence comes as no surprise given the higherturnover on the SGE in September, robust jewellery sales reported for GoldenWeek and the more-than-doubling MoM China gold imports we calculated usingour proxy series. It also needs to be seen in the context of the lowest monthlyaverage gold price since December 2013. Nevertheless it will come as a reliefto the gold market that China can still require such a large amount of gold fromthe international market after a series of months in which its requirementseemed to be dwindling away to nothing.

    At long last, Anglo American has shipped the first iron ore from its 26mtpaMinas Rio pellet feed project in Brazil. Just like many iron ore projects beingprogressed over recent years, Minas Rio is both late and way overbudget, but is now adding incremental supply to the market