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Chile Commodities August 2021

Chile: Copper prices ebb in August but stay fairly elevated

Copper prices dipped in August, coming in at USD 9,373 per ton on average, down from July’s USD 9,451 per ton and marking the third consecutive month of falling prices. However, prices were 44.0% higher than in the same month last year and 20.6% higher year-to-date, and remained high by historical standards.

The ongoing pullback was likely linked to a firmer dollar on average during August, which made copper more expensive for holders of other currencies. Moreover, rising Covid-19 cases globally and ebbing Chinese appetite for the metal—amid a slowing economy, releases of the metal from state reserves and a more abundant supply of scrap copper—likely also weighed on prices. On the supply side, strike action was averted at the Escondida mine—the world’s largest copper mine—after the workers’ union and mine operator BHP reached a deal. This more than offset the impact on prices of strikes at two smaller Chilean mines in August.

Looking forward, copper prices are seen ebbing gradually as global growth slows. However, sustained demand from the electric vehicles and renewable energy sectors should provide support, while potential further labor disputes at copper mines pose upside risks.

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