Chile: Copper prices moderate further in May
June 1, 2011
In May, copper prices eased 1.6% over the previous month, to finish at USD 9,225 per tonne (equivalent to USD 4.18 per pound), which marked the third consecutive monthly drop. With the May price drop, copper prices fell further below the USD 9,858 per tonne peak recorded in February, which had marked the highest end-of-month level on record. Despite the monthly price drop, copper prices remain elevated and are 33.2% higher than in the same month last year. Prices are expected to remain high throughout the year, as China's copper demand strengthens. On 25 May, miners at El Teniente, Chile's fourth largest mine, went on strike demanding higher wages and better benefits. However, the strike soon escalated to violence and, by June 6, the mine reported to be operating at less than half of its capacity, as miners stay off work to avoid the conflicts. Events at El Teniente are likely to exert further upward pressure on copper prices as supply concerns spread. High prices for copper, which accounts for half of the country's total exports, saw exports expand 28.2% year-on-year in May. Moreover, the 3-month sum in exports reached USD 22.2 billion in May, which exceeded the USD 19.7 billion peak recorded in May 2008 for the fourth consecutive month.