Chile: Copper prices decline in January
February 5, 2019
Copper prices hit a one-and-a-half year low at the start of the year and recovered somewhat by the end of January. Prices averaged USD 2.69 per pound (equivalent to USD 5,939 per ton) in January, down from December’s USD 2.75 per pound. Consequently, the average copper price in January was 19.0% lower than in the same month last year.
The price for copper took a sharp downturn in the first week of January, after China’s producers slashed new orders for the raw material against the backdrop of rising fears of cooling global demand. Yet, the red metal pulled out a comeback by the end of the month, supported by a weaker dollar and declining trade tensions amid some encouraging signs over the upcoming trade talks between the U.S. and Chinese officials scheduled for mid-February. Meanwhile, supply bottlenecks also pushed prices up at the end of the month, amid fears of after Vale—Brazil’s’ largest copper producer—came scaling back its output projections as it comes under scrutiny over the Minas Gerais’ dam disaster.
In Chile, copper production was upbeat in the January-November period of 2018, after two consecutive years of contractions. However, Chilean authorities expect copper production to grow below potential this year, as volatility in international markets weighs on investment. Further supply headwinds in Brazil and Indonesia should also support prices this year, as China’s demand for the red metal increases, due to its usability in new technologies, especially in renewables and electric cars.
Author: Nicolás J. Aguilar, Economist