Chile: Copper prices drop in September
October 1, 2022
Copper prices declined in September to USD 7,746 per metric ton compared to the prior month’s USD 7,991 per ton. Prices were down 16.9% in September from the same month of the prior year.
Lower prices last month were likely driven by a downbeat panorama for global demand, amid rising interest rates and a Chinese economy buffeted by Covid-19 restrictions and a property downturn. Meanwhile, Chile’s copper output fell 9.4% year on year in August, the 13th straight monthly decline and the sharpest since April. Chile’s output has been dampened in recent months by a deterioration in ore quality, water shortages and lower refining rates. Positively, a planned strike at the Escondida mine—the world’s largest—was recently put on hold after union leaders agreed to talks.
Looking forward, the rejection of the proposed constitution is positive for the mining sector, and the government’s investment plan announced in September will reduce the tax burden for new copper projects. However, some uncertainty is still being generated by an updated mining royalty bill currently in Congress. In any case, Chile will remain the world’s largest copper producer for the foreseeable future. Copper prices are now expected to average around USD 8,000 per ton in 2023. While down from the USD 9,000+ level observed during much of 2021 and H1 2022, a copper price of USD 8,000 would still be substantially higher than pre-Covid levels and would support the public coffers.
Author: Oliver Reynolds, Economist