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Chile Commodities February 2020

Chile: Copper prices fall to near two-year low in February

In February, average copper prices fell to their lowest point since May 2017 as the spread of coronavirus around the globe rattled commodity markets. On average, prices for the red metal logged USD 2.58 per pound (equivalent to USD 5,688 per ton), down from January’s average price of USD 2.74 per pound (equivalent to USD 6,036 per ton). Meanwhile, prices were 9.7% lower than in the same month of 2019.

The decline in copper prices reflected deteriorating demand prospects, against the backdrop of dismal manufacturing data from China in February and slower global growth expectations for this year due to the coronavirus outbreak. Moreover, rising copper warehouse levels at the end of February further weighed on prices, as the slowdown in demand prompted fears of a supply glut ahead. In Chile, copper exports likely cooled in February after Chinese buyers deferred shipments due to port shutdowns. Meanwhile, coronavirus concerns prompted Chile to cancel the annual Cesco Week, an event that brings together the largest players from the copper industry and which was scheduled for 23–27 March.

Looking ahead, copper prices are seen picking up this year on expectations that the outbreak will be contained by the end of H1. From then onwards, easing trade tensions and a stream of Chinese stimulus should support demand for the red metal. Moreover, the medium-term price outlook looks bright as refined production lags slightly behind usage, amid limited production capacity and increasing demand for copper in new technologies such as electric vehicles and green-energy projects.

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