Protests in Peru calling for the departure of President Dina Boluarte threaten to affect access to nearly $4 billion worth of copper, or nearly 2% of global supply, at a time when China’s reopening promises to boost demand.
Copper Prices Rise Due to Low Supply and Rising Demand
Yesterday, copper rose 0.08% to close at 775.2, supported by indications of a tight supply and projections of rising demand.
The world’s second-largest economy, China, shifted away from its tight zero-carbon standards during the fourth quarter, adding to expectations of stronger industrial demand.
The massive Antapaccay mine, the world’s second-largest producer, is currently running at “limited” capacity as a result of the greatest wave of civil unrest to hit Peru in 20 years.
The copper premium at Yangshan dropped to $31.50 per tonne, the lowest level since April 2022, signalling a decline in Chinese demand for imported copper.
Due to decreasing ore grades and Chile’s drought, Antofagasta (LON: ANTO) of Chile reported a 10.4% decrease in copper output for 2022.
According to the corporation, it produced 646,200 metric tonnes of copper in 2018, which was below their forecast of 640,000–660,000 metric tonnes.
The world’s greatest producer of copper, Chile, is home to four Antofagasta mines. Antofagasta anticipates production in 2023 to rise to between 670,000 and 710,000 metric tonnes at net cash costs of $1.65/lb, up from $1.61 in 2022.
Additionally, LME and SHFE warehouse stockpiles decreased to a combined total of less than 186.4 thousand metric tonnes, or just over two days’ worth of world consumption.
Technically, the market is under short covering because open interest has decreased by 12.73% to close at 3447 while prices have increased by 0.6 rupees.
Now that copper is receiving support around 768.8, a move below might lead to a test of the 762.5 levels, and a move above could lead to a test of the 784.7 levels; resistance is now likely to be seen at 779.9.
