Home Headline News China Loves Copper
Commodities, Commodity, Outlook, Oil, grain, copper, gold, wealth, global, optimism

With the price of copper reaching a 10-year high thanks in no small part to China’s insatiable appetite, Chile, the world’s leading producer, faces a “unique” opportunity, experts told AFP.

Copper rose to $4.21 a pound on the London Metal Exchange on Wednesday, meaning it has doubled its price since March 2020.

Now experts believe its price, spurred by demand from China, could beat all records in the coming weeks, surpassing its previous high of $4.60 in February 2011 and potentially rising above $5 a pound.

“The intensity of consumption of primary materials in China has intensified due to the (coronavirus) pandemic,” Juan Carlos Guajardo, director of the Plusmining consultancy, told AFP.

The Asian giant, which buys almost half of the world’s copper production, is trying to become the “true factory of the world,” he said.

On top of Chinese demand, copper purchases are also on the rise due to its use in renewable energy and electric mobility.

In addition, a weakened US dollar means raw materials priced in the American currency are cheaper for investors using other currencies, and stimulus packages to reboot economies ravaged by the pandemic have flooded the global market with liquidity.

At the same time, there has been a reduction in investment in the supply side of the mining industry since the “boom” years of 2003-13 — and the subsequent lack of new expansion plans of existing mines has meant less copper on the market and higher prices for Chile.

All in all, the conditions have created a favorable scenario for Chile’s main export.

– ‘It won’t be around forever’ –

Chile produces close to a third of the world’s copper and copper represents 10-15 percent of national GDP.

“The rise in the copper price gives Chile a unique opportunity to keep developing the mining sector, increase production capacity and thus meet the expected rising demand,” said Mining and Energy Minister Juan Carlos Jobet.

The increase in price “could mobilize more investment in the mining sector and that could mean greater employment” during a year in which Chile will be hoping to return to economic growth after a tough 2020 that saw GDP fall by six percent due to the pandemic, Finance Minister Rodrigo Cerda said.

Chile’s 2020 would have been a lot more painful had the copper industry been forced to shut down like many other sectors during a coronavirus-imposed lockdown.

But given the main mining sites were far from the infection hot spots, the copper industry was spared the painful closures that hit commercial centers, restaurants, bars and cinemas, amongst other businesses.

However, Chile must be wary of a rising supply in copper, according to Marcela Vera, an academic at the University of Santiago.

Given its use in renewable energies and potentially limited supplies, it would be counterproductive for Chile to produce greater amounts of copper that bring down prices when the metal could become so precious in the future.

“What Chile needs to do sovereignly is to generate a reduction in the offer so the prices adjust,” said Vera.

Increased production would lead to falling prices and a shorter lifespan for the metal.

“Copper is not a renewable product and it won’t be around for ever,” Vera said.

You may also like


Your Trusted Source for Capital Markets & Related News

© 2024 LiveTradingNews.com – For The Traders, By The Traders – All Right Reserved.

The information contained on this website shall not be construed as (i) an offer to purchase or sell, or the solicitation of an offer to purchase or sell, any securities or services, (ii) investment, legal, business or tax advice or an offer to provide such advice, or (iii) a basis for making any investment decision. An offering may only be made upon a qualified investor’s receipt not via this website of formal materials from the Knightsbridge an offering memorandum and subscription documentation (“offering materials”). In the case of any inconsistency between the information on this website and any such offering materials, the offering materials shall control. Securities shall not be offered or sold in any jurisdiction in which such offer or sale would be unlawful unless the requirements of the applicable laws of such jurisdiction have been satisfied. Any decision to invest in securities must be based solely upon the information set forth in the applicable offering materials, which should be read carefully by qualified investors prior to investing. An investment with Knightsbridge is not suitable or desirable for all investors; investors may lose all or a portion of the capital invested. Investors may be required to bear the financial risks of an investment for an indefinite period of time. Qualified investors are urged to consult with their own legal, financial and tax advisors before making any investment. Knightsbridge is a private investment firm that offers investment services to Qualified Investors, Members and Institutions ONLY. Qualified Investors are defined as individuals who have met those Qualifications in the relevant jurisdictions. Members are defined as individuals who have been accepted into the Knightsbridge membership program. Institutions are defined as entities such as banks, pension funds, and hedge funds. If you are not a Qualified Investor, Member or Institution, you are not eligible to invest with Knightsbridge. All investments involve risk, and there is no guarantee of profit. You may lose some or all of your investment. Past performance is not indicative of future results. Knightsbridge is not a registered investment advisor, and this disclaimer should not be construed as investment advice. Please consult with a qualified financial advisor before making any investment decisions. By accessing this website, you agree to the terms of this disclaimer. Thank you for your interest in Knightsbridge.