Chile: Copper prices fall in December
Copper prices pulled back in December, coming in at USD 9,555 per ton on average, compared to November’s USD 9,729 per ton. However, prices were 22.9% higher than in the same month of the prior year, and picked up towards the end of December and heading into early 2022.
The lower December reading was likely linked to the emergence of the Omicron variant of Covid-19, which fueled concerns about global growth prospects. Moreover, an agreement was reached at the Las Bambas mine in Peru at end-December, allowing production at the mine to restart following disruption due to community protests. Meanwhile, the latest available data shows that Chile’s copper output fell 1.6% annually in November, softer than October’s 3.6% decline.
Looking forward, copper prices are seen ebbing somewhat this year as global growth slows and supply concerns gradually ease. Sustained demand from the electric vehicles and renewable energy sectors should provide some support though. Further Covid-19 variants pose a downside risk, while potentially tougher environmental restrictions on the mining sector under incoming President Boric’s government pose an upside risk due to the likely impact on supply. Indeed, in a recent speech following his election victory, Boric declared publicly his opposition to the USD 2.5 billion Dominga mining project approved last year.