Chile: Copper prices decline in December
January 10, 2019
Copper prices fell in recent weeks after a soft recovery in the October–November period. Prices averaged USD 2.75 per pound (equivalent to USD 6,061 per ton) in December, down from the previous month’s result (November: USD 2.81 per pound). The average copper price in December was consequently 11.6% lower than in the same month last year.
The price of copper receded in December amid reduced demand from China, which is by far the world’s largest consumer of copper. Producers slashed new orders of the red metal despite a hinted truce to the trade war in the November–December G20 summit. As a result, copper exports from Chile, which is the world’s top producer, fell by 13.6% year-on-year in December and contracted for a fifth consecutive month.
U.S. and Chinese officials concluded what seems to have been a positive first round of talks aimed at settling trade disputes. This bodes well for copper prices, which—also thanks to a weaker dollar—trended upward in the first two weeks of the year. Chilean authorities project copper production to surpass the six-million-ton mark by the end of the year and expect output to reach its peak by 2025. Potential strikes, however, remain the main downside risk to the outlook.
Author: Nicolás J. Aguilar, Economist