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Chile Commodities March 2018

Chile: Copper prices sour in March on trade war fears

Copper prices declined in March for the second consecutive month. Copper prices averaged USD 3.08 per pound (equivalent to USD 6,794 per ton) in March, down 3.0% from February’s average of USD 3.18 per pound. However, despite the softness observed since the start of 2018, prices are still substantially higher than this time last year; in annual terms, copper prices increased 16.6% in March.

The price fall observed over the last month is likely due in part to rising fears of a trade war between the U.S. and China—the two largest consumers of the red metal. Economic slowdown in either of these two economies would hit demand for copper. In addition, global stockpiles of copper have been piling up so far this year. Although this is partly a result of seasonally weaker demand and the impact of the Chinese Lunar New Year, the scale of the increase in inventories is faster than in the past, potentially pointing to flagging global demand. In addition, the absence of significant supply disruptions so far this year has also helped dampen prices.

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