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Chile Commodities January 2022

Chile: Copper prices rise in January

Copper prices increased in January, coming in at USD 9,780 per ton on average, compared to December’s USD 9,555 per ton. Moreover, prices were 22.8% higher in January than in the same month of the prior year.

The higher January reading was likely linked on one hand to stronger signals regarding global demand, thanks to substantial monetary easing in China. Moreover, supply concerns lingered: The latest data showed that Chile’s copper output fell 0.6% annually in December—the fifth consecutive monthly contraction—while there were fears of a strike by workers at a Canadian mine.

Looking forward, copper prices are seen ebbing somewhat this year as global growth slows and supply concerns gradually ease. Sustained demand from the electric vehicles and renewable energy sectors should provide some support though. Further Covid-19 variants pose a downside risk, while potentially tougher environmental restrictions on the mining sector under incoming President Boric’s government pose an upside risk due to the likely impact on supply. Boric has already declared his opposition to the USD 2.5 billion Dominga mining project, while a senate commission recently approved an adjusted mining royalty bill which would raise levies on firms. Moreover, the new constitution under discussion also poses risks to mining, with the constitutional assembly’s environmental committee in early February giving a green light to the nationalization of the mining sector.

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