UPDATE: Copper prices have surged past $13,000 per ton due to a strike at Chile’s Mantoverde mine and rising fears of renewed US tariffs on refined copper, creating a tense supply situation. This dramatic increase marks a significant milestone, with prices jumping more than 4% in a single trading session.
The strike, which started earlier this week, is expected to last for more than two months according to union representatives. The Mantoverde mine, although accounting for less than 0.5% of the global copper supply, plays a crucial role in market stability. The mine’s operator aims to maintain 30% of normal production using non-striking workers, but the labor unrest highlights growing tensions between mining companies and their employees, raising the specter of further disruptions.
Concerns are growing over potential tariffs from the US government, which will make a crucial decision by June 30, 2023. Having previously exempted refined copper from tariffs, any changes in policy could have dire consequences for global supply chains. Analysts at Commerzbank, including commodity expert Barbara Lambrecht, indicate that previous tariff-induced premiums have already led to increased costs in the market, and a repeat could exacerbate current challenges.
As copper inventories on the COMEX rise, the market is becoming increasingly jittery. The current situation is compounded by a historical context where fears of tariffs have led to significant premiums being paid on the New York exchange compared to the LME (London Metal Exchange). Although these premiums have recently decreased, the ongoing strike and tariff uncertainties are raising alarms about potential scarcity of copper outside the US market.
The impact of these developments is immediate and profound. Investors and manufacturers alike are bracing for potential price hikes that could ripple through various industries, from construction to electronics. Given copper’s critical role in global infrastructure and technology, the stakes are high for both the economy and consumers.
What happens next? Traders and industry experts will closely monitor developments from the Mantoverde mine and the US government’s tariff decisions in the coming weeks. The potential for additional strikes at other mines may also loom large, further complicating the supply picture.
Stay tuned for updates as this situation develops. The implications of these factors on copper pricing could be significant, and markets are reacting swiftly.
