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Copper Plunges 2% as Chile, Indonesia Supply Concerns Fade

March 21, 2017 at 17:06 by Andrew Moran

Copper futures are plummeting on Tuesday as supply concerns in Chile and Indonesia are fading away. With an Indonesian mine restarting production and efforts to resolve a strike at the world’s largest copper mine in Chile, copper futures have fallen to a one-week low.

May copper futures tumbled $0.051, or 1.93%, to $2.616 per pound at 16:37 GMT on Tuesday on the New York Mercantile Exchange. Copper prices are trading at their lowest levels since March 14. The industrial metal continues to trade in positive territory in 2017 as copper is up more than 4% year-to-date.

The union that is representing striking workers at the Escondida mine in Chile reportedly confirmed that it was open to renewed discussions. This could help resolve a strike at the world’s biggest copper mine. Strikes at the mine have been ongoing for all of March.

After a stoppage that has lasted for more than a month, workers at the Grasberg mine in Indonesia will restart their production efforts soon.

Both events have helped copper futures make significant gains this year. As investors’ concerns over potential supply disruptions come to an end, traders are selling off the red metal. Moreover, recent industry data highlighted that the global copper market had a 17,000-tonne surplus in December, compared to a 3,000-tonne deficit in November.

Copper is gaining some support from a falling US dollar. The greenback dipped 0.03%, continuing its slump in 2017. A strengthening dollar makes commodities like gold, silver, and copper more expensive for foreign investors.

Experts believe that demand for copper will be fierce over the coming years. The US, Canada, China, and the UK have all pledged to undergo rigorous infrastructure spending, which will require a lot of copper. This is one of the reasons why copper had posted its best week in more than three decades last year because US President Donald Trump has proposed $1 trillion worth of infrastructure spending.

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