The decision to keep Chinese factories shut after the Lunar New Year sent shudders through the massive mines of Brazil and Chile that feed them. Now, with China getting back to work and Latin America the new virus hot spot, concern is shifting from demand to supply.
Iron ore shipper Vale SA had a scare last week as it had to fend off an attempt by Brazilian prosecutors to close a complex that accounts for a tenth of its output. A union at copper behemoth Codelco said members are concerned that a still small outbreak of the virus will spread.
Alarm bells are starting to ring again in metal markets as the outbreak explodes in Latin America, with the region’s highly urbanized population of 600 million accounting for about 40% of daily deaths globally.
That’s coming at a time when Chinese demand is recovering and markets tighten. Chile is the top exporter of copper and Brazil is the second-largest shipper of iron ore.
“Mine supply problems from Covid-19 in Latin America are far from over yet,” Wenyu Yao, senior commodities strategist at ING Bank, said by phone from London. “Chile is a big unknown now.”
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