Chile: Coronavirus hits copper prices in January
Copper prices fell in January as the escalation of the coronavirus outbreak hindered Chinese manufacturing activity. On average, prices for the red metal logged USD 2.74 per pound (equivalent to USD 6,036 per ton), down from December’s average price of USD 2.76 per pound (equivalent to USD 6,088 per ton). In contrast, prices were 1.6% higher than in the same month of 2019.
January’s copper price downturn reflected concerns over a fall in demand for the red metal in the near-term amid slower economic activity in China—the world’s largest consumer of the metal. While the celebrations of the Chinese New Year often imply a deceleration in industrial activity in January, due to fewer working days, the spread of coronavirus throughout major cities of the country stoked investors’ fears of a sharper- and longer-than-expected slowdown.
In Chile, Anglo American reported a fall in copper output at its Los Bronces mine in the fourth quarter of last year due to drought conditions, which appear to be linked to a broader desertification process in the center regions of the country. According to our analysts, 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 cuts in output this year. The U.S.-China trade conflict poses a downside risk to prices.