Chile: Copper prices slip in February but remain solid
March 1, 2018
Copper prices dipped marginally in February, putting an end to eight consecutive monthly price rises. Copper prices averaged USD 3.18 per pound (equivalent to USD 7,007 per ton) in February, down 0.9% from January’s average of USD 3.20 per pound. In annual terms, copper prices increased 17.9%. Despite the dip, the average copper price for February still hovered close to January’s multi-year high, boding well for the external sector and the country’s fiscal position.
Prices were dampened in the month by a stronger U.S. dollar on the back of hawkish comments by Federal Reserve officials. In addition, factory output in China—the world’s largest consumer of the red metal—slowed sharply in February. Although this was partly due to lower economic activity due to the Lunar Year holiday, investors were also concerned of a wider drop in impetus as the country continues efforts to curb pollution and tighten credit conditions. In addition, wage deals reached at two Chilean mines this year have dampened fears of supply disruptions. However, copper prices remain significantly higher than this time last year, supported by strong global growth.
Author: Oliver Reynolds, Economist