COMEX copper futures edged higher in the Thursday session, recovering from Wednesday's sell-off as traders reassessed the Chile supply risk. The front-month contract settled at $6.549/lb ($14,438/mt equivalent), up 1.05% from Wednesday's close of $6.480/lb. The recovery suggests the market views the recent pullback as a buying opportunity given the structurally tight concentrate market.
LME three-month copper traded in a narrow range between $13,880 and $13,950/mt, closing at $13,920.5. The cash-to-three-month spread remains in modest backwardation, indicating nearby tightness. SHFE copper in Shanghai posted a 0.5% gain to 102,620 CNY/mt, tracking the Western markets.
Key to the move is the approaching mid-June wage negotiation at Codelco's Chuquicamata and El Teniente divisions. While current production continues without disruption, the union leadership has signaled willingness to strike if demands for profit-sharing increases are not met. Chile's copper output has already declined 3.2% year-to-date due to lower ore grades and water constraints.
Physical premiums in the Atlantic basin remain elevated at $95-110/mt above LME cash, with European consumers facing additional logistics costs from Red Sea rerouting. In China, Yangshan premium held steady at $48/mt, suggesting balanced import demand.
Copper buyers should consider fixing Q3 premiums now. The current backwardation and potential Chile disruption premium could widen spreads further. Spot purchases may carry a $95-110/mt premium over LME cash. Term contract negotiations for H2 2026 should factor in a potential 5-10% supply premium if Chile labor talks deteriorate.