Base Metals


Weak Chinese manufacturing and investment data hurt copper during the week, but it was boosted Friday by trade talk optimism.

The copper price has continued to make gains this past month, rising more than 12 percent to US$5,822.50 per metric ton over the period.

The red metal peaked during this timeframe on November 8, when it traded for US$5,951, and has since been on the decline; however, overall it still remains up month-on-month.

This past week, copper’s price fell as it reacted to weak manufacturing and investment data from China, which fueled concerns about demand from the top consumer of the red metal.

Although the metal did reach a two week low, Friday’s (November 15) news that China and the US are getting closer to a trade deal sparked a revival for copper. And many analysts see a bright long-term future for the red metal as base metals become a more crucial aspect of the economy.

“We’re seeing more and more appetite into mining and metals,” said Jason Chang, CEO and managing director of EMR Capital, to the Investing News Network (INN) recently.

“I think we’re going to see an increase in exploration in copper … after all, the world needs more copper.”

Some analysts, such as Chris Berry of House Mountain Partners, have pointed to potential labor disruptions in South America as a key way to understand copper.

“With respect to supply shocks in copper, watching Chile and other major producers to see how labor issues and funding for expansions are handled will be key,” he previously told INN.

Since mid-October, there have been a few instances where politics have affected the copper industry in South America.

On October 21, workers at BHP’s (ASX:BHP,NYSE:BHP,LSE:BLT) Escondida mine in Chile walked off the job in solidarity with protesters in Santiago. But despite the protests in Chile, Chilean copper miners have maintained production, and workers at Escondida returned to the job the very next day.

That said, some analysts are still hesitant to label Chile as a safe nation for mining.

“If the crisis worsens, and major political demands are made again, major unions get involved, general strikes are organized … no doubt there will be vulnerabilities to the services that mining firms require,” Juan Carlos Guajardo, head of consultancy Plusmining, told Reuters.

As a whole, though, copper is poised to do well in the coming months, according to FocusEconomics’ panel of analysts. In October, the panelists projected that the red metal’s price will average US$5,890 in 2019’s final quarter.

On Wednesday (November 13), copper was trading for $5,822.50 on the London Metal Exchange.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Sasha Dhesi, hold no direct investment interest in any company mentioned in this article.



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