It’s been a wild start to the year for the copper market. We’ve witnessed riots in Peru, a reopened China and a shutdown at Grasberg, one of the world’s biggest mines. To make matters worse, Chile, the world’s biggest producer, has had to contend with general operational difficulties, as well as its own blockades.
The question is whether this volatility in the metal’s supply chain will remain – critical commodity shortages are no trifle, as the past year has shown, and inventories were at historic lows a few months ago. Already, Chilean state miner Codelco has reported an 11 per cent year-on-year drop in production to 1.45mn tonnes for 2022, and its key export hub is only operating at one-third capacity after a fire last year. A clearer picture will emerge as the major miners release 2022 results and 2023 forecasts in the coming weeks.
Copper is currently trading at just under $9,000 (£7,446) a tonne, after peaking in recent weeks at $9,500 a tonne. “We expect copper prices to continue to exhibit strength witnessed during the past few days,” said HSBC analysts last week. Nitesh Shah, head of commodities and macroeconomic research at fund manager WisdomTree, has a more bearish short-term view. He said the metal was likely to come under “near-term pressure because of macroeconomic headwinds”.