Chile: Copper prices stable in September
Copper prices stabilized somewhat in recent weeks after a near three-month long decline through to the beginning of September. Prices averaged USD 2.74 per pound (equivalent to USD 6,051 per ton) in September, broadly in line with the previous month’s result (August: USD 2.75). The average copper price in September was consequently minus 0.03% lower than in the same month last year.
Copper prices have recovered in the second half of September thanks to firming global demand for the metal as consumers recommitted to previously postponed purchases amid sustained robust economic growth in the world’s top economies. Crucially, China, the world’s largest consumer of copper, showed resilience despite the introduction of new U.S. trade tariffs. Reflecting the positive development, Chinese imports of copper ores recovered after a weak summer, buoyed by healthy real estate activity. Meanwhile, growth in the U.S. remained robust, further reassuring the base metals market which was also aided by a weaker U.S. dollar.
Meanwhile, copper exports in Chile, the largest copper-producing country in the world, fell 17.0% year-on-year in September. The marked drop in exports came amid lower global prices largely owing to U.S.-China trade tensions. In addition, the Spence copper mine in Chile was forced to partially shut down operations in mid-September due to a fire at the mine. This, coupled with news that Chilean lawmakers were proposing increasing taxes for all mining companies that extract more than 12,000 tons a year, likely weighed on copper prices in September.
The evolution of copper prices in the medium-term appears to be strongly related to the health of emerging-market economies. In the medium- to long-term, copper prices should trend upwards on solid global demand, largely stemming from the auto sector and related electric vehicle infrastructure. In addition, China’s Belt and Road Initiative is expected to drive additional copper demand in the coming years, adding further upward pressure to the price of the red metal.