Chile: Copper prices rebound in December on ebbing trade tensions
January 2, 2020
Copper prices jumped in December on the announcement of a “phase one” U.S.–China trade deal and an improved economic outlook for China. On average, prices for the red metal logged USD 2.76 per pound (equivalent to USD 6,088 per ton), up from November’s average price of USD 2.66 per pound (equivalent to USD 5,860 per ton). Moreover, prices were 0.4% higher than in the same month of 2018.
In December, prices for the red metal soared to their highest point since May 2019 after on 13 December the US and China announced they had reached a partial trade deal. Copper markets welcomed the detente, after a long period of on-and-off negotiations and tariff escalation. In addition, improved conditions in the Chinese manufacturing sector in December further buoyed copper prices, as economic growth in the top consumer of the red metal showed signs of stabilizing.
Copper prices are seen fairly stable this year. Supply-side constraints should prop up prices, as output in top producer Chile receded in the back-end of 2019, while smelters around the world have announced a cut in output this year. The U.S.-China trade war poses a risk to prices.
Author: Nicolás J. Aguilar, Economist