(Bloomberg) The phase-one trade deal between the U.S. and China may bring some relief to copper exporters, helping shore up the finances of Chilean state-run producer Codelco, Mining Minister Baldo Prokurica said.
Copper prices may rally to $3 a pound, from an average of about $2.72 last year, as Washington and Beijing work to resolve their trade dispute that has ushered in a “complex period” of economic uncertainty, hurting industrial demand for the metal, Prokurica said in a phone interview.
U.S.-China tensions helped trigger a slowdown in global manufacturing, fueling concerns over the outlook for copper and keeping a lid on price gains even as inventories shrank. The two countries, the world’s biggest consumers of the metal, signed what they billed as the first phase of a broader trade pact on Wednesday. Copper prices rallied in the run-up to the agreement, and posted a second straight weekly gain.
“We constantly sustained our thesis, which I think has been confirmed,” Prokurica said Thursday. Copper is “artificially low because of the instability caused by the trade war.”
A resolution to the trade dispute may prompt buyers including China to rebuild their stockpiles, helping fuel the rebound in prices, Prokurica said. Inventories tracked by exchanges in Shanghai, London and New York have shrank by more than a third in the past six months.
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