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Chile Commodities November 2019

Chile: Copper prices pick up in November

Copper prices gained some ground in November, buoyed by optimism over a U.S.–China trade deal. On average, prices for the red metal logged USD 2.66 per pound (equivalent to USD 5,860 per ton), up from October’s average price of USD 2.61 per pound (equivalent to 5,757 per ton). However, prices were 5.4% lower than in the same month last year and down 1.3% on a year-to-date basis.

Copper prices gained some ground in recent weeks following Donald Trump’s announcement on 26 November that “phase one” of a trade deal with China was near completion. In addition, supply-side constraints in Chile likely supported prices over the past month, as the top copper producer struggled to quell country-wide protests. Prices, however, slipped at the end of November after diplomatic support from the U.S. to Hong Kong cast doubt on a preliminary resolution of the trade war with China.

The evolution of the U.S.–China trade negotiations will continue to shape the outlook for copper, with price volatility stemming from sudden animosity between the two countries likely to persist in the short-run. The medium-term outlook looks brighter, however, as refined production lags 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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