Chile: Copper prices face strong downward pressure in July
Copper prices continued to fall in the first half of July, but then regained some lost ground in the last week of the month. Prices averaged USD 2.84 per pound (equivalent to USD 6,251 per ton) in July, down from the previous month’s USD 3.16 per pound (equivalent to USD 6,966 per ton). As a result, the average copper price in July was just 4.4% higher than in the same month last year, marking a 12-month low.
Prices dropped to a year-to-date-low in mid-July, largely on the back of escalating global trade tensions and growing concerns of an economic slowdown in China, the world’s largest consumer of copper. Nevertheless, copper prices rebounded somewhat in the weeks since, aided by growing concerns that Chile’s Escondida copper mine, the world’s largest, would be hit by strikes. While the union, the government and BHP are still negotiating to try to avoid the strike at Escondida, the union rejected the proposed latest offer from management on 2 August, signaling that a strike at the mine could kick off as early as the second week of August. Prices were also supported by the announced agreement between Washington and Brussels at the end of July to work toward a zero-tariffs policy framework, which has alleviated some of the European industrial sector’s fears, boding well for copper demand.
However, on 1 August, U.S. President Trump’s administration announced a proposed 25% tariff on USD 200 billion worth of Chinese imports, up from the previously announced 10%. Meanwhile, data from the Chinese manufacturing sector showed the slowest rate of output expansion in eight months in July, largely due to lower export orders. This, coupled with a well-supplied market, exerted downward pressure on copper prices at the beginning of August, likely to be sustained in the short term.