Yesterday, the price of Copper rebounded strongly with an increase of 5.24% thanks to the recovery by China after ending the 2-month lockdowns due to its zero-covid strategy, giving hope to the demand for the metal. In addition, officials announced this week a package of measures to reactivate the pandemic-stricken economy.
On the other hand, the metal has also production problems for various reasons, such as the difficulties in the supply chain due to Covid, extreme weather conditions, high costs due to inflation thanks to the Russia-Ukraine war and even production problems in the main countries of extraction.
Chile, which is the number one copper producing country with more than 25%, had a decrease of 9.8% y/y in production in April after the state productions of the Codelco, La Escondida (the largest deposit in the world) and Collahuasi mines fell, the 1st by 6.1% with 16,000 tons, the 2nd by 2.6% with 88,000 tons and the last by 26.5% with 42,000 tons. In addition, the Los Pelambres de Antofagasta mine faces a penalty for mismanagement of tailings.
Peru, which is the second largest producer of the metal, has paused production due to violent community protests against mining. Said protests have given rise to fires in two key mines, Las Bambas, where production was paralyzed for 42 days, and Los Chancas. Currently there is no exact calculation of damages.
Technical analysis
On a monthly basis, the price of copper is rising after it closed with a Hammer candle in May, testing the 20-month SMA. Since 2021, the price has been within a wide range of 4,000-4,730 excluding candle wicks and made historical highs at 5.0340.
On a weekly basis, the price is for a 3rd week on the upside, breaking the 50 and 20-period SMAs. The year’s highs its the next key resistance at 4.73. The 100-period SMA is at 4.0000.
Lastly, on a daily basis, price momentum on Thursday recovered over 60% of its April-May decline, breaking the 200, 50 and 100 SMAs to close above them and break above the 4.5000 level. The OB terittory is at the 88.6% Fibo level at 4.7452, while if it exceeds the previous high at 4.8370, it would be looking to test historical highs. Current lows are at 4.0320. The 20-period SMA is at 4.2579.
https://es-us.vida-estilo.yahoo.com/producci%C3%B3n-minas-chilenas-cobre-cierra-144907641.html
https://es-us.vida-estilo.yahoo.com/menor-producci%C3%B3n-cobre-chile-enfatiza-162915758.html
https://www.miningweekly.com/article/chile-starts-sanction-process-against-los-pelambres-copper-mine-2022-06-02
https://www.americaeconomia.com/las-bambas-incendio-tension-comunidades
https://www.americaeconomia.com/minas-cobre-chile-produccion-dispar
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Aldo Zapien
Market Analyst – Educational Office – Mexico
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