Copper Eyeing on China- US Trade Battle

Copper prices have gained around 36% over the past 18 months turning mines that were once loss-making into profit generators. But the threat of a prolonged trade war between China and the US, the two biggest markets for the red metal, will hang over the gathering like a raincloud at one of Chiles famous asados (barbecue).

The future for the red metal should be bright. A dearth of investment during the downturn means the industry is facing several years with few major mines coming onstream, tightening supply. In fact, production will rise most in Chile this year but only because its mines performed so poorly last year, largely due to the prolonged strike at Escondida, says Jorge Cantallopts, head of research at the Chilean Copper Commission (Cochilco).

Meanwhile, led by China, demand is rising slowing but steadily, leaving the market facing looming deficits by early next decade. Further ahead, the move to electric vehicles, just beginning, looks set to supercharge demand over the coming decade. In fact, given the uncertainty about which battery technologies will predominate in the future, copper may be a better bet on the electrification of transport over the other energy metals such as cobalt and lithium, which have attracted so much press attention in recent years. A special panel, featuring experts from BMO, CRU and Nissan, will look at what impact the EV revolution will have on copper production and demand.

Domestic markets remained tightly gripped by the events in world trade. Indian Copper April expiry contract was down 0.69% to end at Rs 436.9 per kg. The prices tested a high of Rs 439.35 per kg and a low of Rs 435.1 per kg.