ChronicleHerald – With an already tight copper market pushing prices to record highs, a possible strike at BHP Billiton’s massive Escondida mine in Chile and problems at several others could mean “very big things on the price side,” observers say, because even a short-term disruption could put a strain on supplies.
“There have been problems and labour disputes mushrooming all over the place,” said Bart Melek, a senior economist with BMO Capital Markets.
“Normally, a small work disruption would not make much of a difference at all, but we virtually have no spare capacity at all, and with no spare capacity and very little prospect of supply growing very quickly, it means even an incremental disruption to output can mean very, very big things on the price side.”
Copper, zinc, nickel and other base metals’ prices have been rising because of soaring demand from China and India. Demand has also being bolstered by a bigger interest in commodities from the investment community, especially hedge funds, which often look to cash in on quick investments, said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier, noting that commodities have “really come into vogue.”
