Chile: Copper prices plummet in May
Copper prices sank to a four-month low in May, as reignited U.S.–China trade tensions roiled commodity markets. Average prices for the red metal clocked in at USD 2.73 per pound in May (equivalent to USD 6,023 per ton), falling from April’s average price of USD 2.92. Moreover, copper prices were 11.8% lower than in the same month last year. On a year-to-date basis, however, copper prices were up by 1.49%.
In May, copper lost nearly all of this year’s gains after President Donald Trump wrongfooted analysts by unexpectedly raising tariffs from 10% to 25% on USD 200 billion of Chinese goods at the start of the month, heightening anxieties over a slowdown in China’s industrial sector. In addition, a plunge of the renminbi against the USD weighed on Chinese demand for the metal, putting further downward pressure on prices as China accounts for almost half of the world’s demand for copper.
On the other hand, supply-side headwinds likely buffered the downturn and should support prices in the near-term. In Chile, three unions from the Chuquicamata mine, ran by the state-owned copper giant Codelco, voted by a large majority on 27 May to go on strike if a last round of negotiations, scheduled for 6 June, fail. Meanwhile, constraints at Peru’s Las Bambas mine are set to continue, after talks over pay between the local community and Chinese miner MMG collapsed at the end of May. Lastly, power shortages and a change in the tax law in Zambia are also seen tightening supply of the red metal ahead.