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Chile Commodities September 2023

Chile: Copper prices fall in September; Chilean copper output improves

Copper prices averaged USD 8,277 in September, down from the prior month’s USD 8,348. Prices were likely dampened in recent weeks by improved global supply: Peruvian copper production rose in annual terms in July and August, while in the same two months Chilean copper output increased 0.9% and 2.7% year on year. This more than offset signs of stabilizing demand from China.

Copper prices are forecast to average slightly higher than their September level in Q4 2023 and next year, buoyed by strong demand from the renewable energy sector and an expected acceleration in China’s economy from current subdued levels. On the supply side, Chilean copper output will likely be fairly stagnant in 2023 as a whole relative to 2022 amid declining ore grades and water shortages in H1. That said, Chilean copper output should get a boost next year, thanks to the completion of new mining projects and as El Niño brings rains and thus eases water shortages. Higher taxes on the mining sector as a result of the recently approved mining royalty could temper investment going forward.

A key factor to watch is the treatment of mining in the new constitution. Citizens may well reject the latest constitutional proposal in a December referendum, which would generate uncertainty over the status of the mining sector in a hypothetical third attempt at a constitutional rewrite, if there is one.

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