Chile: Copper prices crash in July
Copper prices tumbled in July, coming in at USD 7,545 per metric ton on average, compared to the prior month’s USD 9,068 per ton. Moreover, prices were down 20.2% in July from the same month of the prior year. Prices did see a slight uptick from the second half of the month, but on 4 August still only traded at USD 7,720.
Lower average prices in recent weeks were driven by improved supply from Peru, fears over recession in developed markets, and downbeat global manufacturing output; the JPMorgan Global Manufacturing PMI fell to a two-year low in July. Domestically, output fell for the eleventh straight month in June in year-on-year terms, and at a sharper pace of 4.7% (May: -2.7% yoy).
The proposed increase in taxes on the mining sector as part of President Boric’s fiscal reform proposal, coupled with the government’s greater focus on environmental protection and a less favorable panorama for mining under the new constitution, bode poorly for future copper output. That said, Chile will likely remain the world’s largest copper producer for the foreseeable future.
On prices, our analysts slashed their forecasts over the last month, in light of a more downbeat global economy. For Q4 this year, copper prices are now expected to average only slightly above USD 8,000 per ton, notably below the level that prevailed for most of 2021 and H1 2022.