Copper up on supply woes but dollar drives worst week since April

By Solomon Cefai

SINGAPORE, Oct 2 (Reuters) - Copper recovered from some of the previous days' losses on Friday, supported by supply concerns, but earlier declines still set it up to notch its worst weekly fall since April.

Benchmark three-month copper on the London Metal Exchange was up 0.32% at $14,289 a metric ton by 0300 GMT. That marked a decline of 2.28% since the end of last week.

Official data on Wednesday showed that copper output in Chile, the world's largest miner of the red metal, fell 12.8% year-on-year in August.

Supervisors at Chile's Escondida copper mine, the world's largest, rejected a collective contract offer, paving the way for a potential strike and adding to supply fears.

"This adds to an overall slump in output, as the industry struggles to maintain aging infrastructure amid difficult operating conditions," Daniel Hynes, senior commodity strategist at ANZ, said in a note.

Inventories are thin in China, where stocks in warehouses monitored by the Shanghai Futures Exchange (SHFE) fell to 38,744 tons, their lowest since January 2024, weekly data showed on Wednesday.

The SHFE was closed for China's National Day and will reopen on October 8.

Supply concerns were not enough to offset a bad week for copper, as the US dollar hit a 17-month high amid a global bond market rout driven by worries over persistent inflation and high government debt.

A stronger dollar makes greenback-denominated commodities like copper more expensive for buyers using other currencies.

The bond market's travails pushed borrowing costs across the globe to multi-decade peaks, threatening to dampen economic sentiment and weigh on the red metal, sometimes called Dr Copper for its use as a gauge of overall economic health.

Among LME metals, aluminium dipped 0.18%, zinc added 0.15%, lead was little changed, up only 0.03%, nickel dipped 0.19% and tin lost 0.72%.