Falling Copper Output

Copper prices are pushing higher again today as focus returns to the supply issues threatening the sector. A major storm in Chile has disrupted operations are several key mines and ports with a few big names (Codelco, Antofagasta and Anglo American) activating safety protocols consequently. Declining output levels in Chile, the world’s leading copper producer, have been a key issue for markets this year. Sulphuric acid r restrictions from China, extreme weather and site maintenance issues at some key mines have combined to weigh heavily on Chilean output which has been falling sharply this year. Indeed, Antofagasta reported this week that its H1 copper output has fallen around 10% as a result of weaker output from two of its key sites.  This comes after BHP recently warned that it expected its Chilean copper output to continue to fall throughout the year and into next year as sulphuric acid shortages continue to impact production levels.

US/Iran War

Developments in the Middle East are also having a big impact on copper prices, impacting global trade expectations. This week, a sharp reversal of the initial highs in crude oil looks to be helping copper prices bounce back here. Crude had jumped higher at h the open following further attacks between the US and Iran over the weekend, leading to the death of three US servicemen. If crude prices start to push higher again, on news of any further attacks, this could cap the rally in copper for now. As such, incoming headlines will be key to monitor.

Technical Views

Copper

For now, the break of the bear channel is holding with price attempting to get back above 6.2845 here. With momentum studies bullish, focus is on a fresh push towards the 6.5830 level with 6.1090 the key support to watch beneath.