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Know the reasons behind the fall in the price of copper

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The price of copper —Peru’s main export mineral— has suffered a 14% drop compared to its value at the beginning of the year, according to an analysis carried out by Citizen Proposal which is presented below.

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The price of the mineral is at US$8,387 per ton, despite having reached a maximum of US$10,400 per ton in March. A similar trend should be noted in other industrial minerals such as aluminum and nickel, which have also reduced their price by 2.67% and 1.7%, respectively.

Copper reached its lowest value in the last 16 months. The most immediate reason for the fall is detected in the increase in the interest rate of the Federal Reserve of the United States, as a measure to contain the rise in inflation.

This represents the largest increase since 1994 and there is a risk that successive increases will cause a recession that affects industrial production. Added to this are the harsh confinement measures imposed by COVID-19 in China and the disruptions created in supply chains as a result of the war between Russia and Ukraine.

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In these circumstances, it is possible to foresee an adjustment in the Peruvian economic projections. Last Friday, June 17, the Central Reserve Bank of Peru (BCR) lowered its growth estimate from 3.4% to 3.1%.

According to its president, Julio Velarde, this responds to the temporary stoppage of the Las Bambas and Cuajone mines due to social conflicts, and the expectations regarding the performance of the agricultural sector due to the lack of fertilizers for the next campaign.

It should be noted that, despite the fall, copper remains at a level that exceeds those obtained prior to the pandemic and would remain high in the medium term. According to International World Bank estimates made in April 2022, the price of the mineral in the next two years would maintain an average value of between US$9,700 and US$9,000 per ton.

However, these forecasts must be taken with caution considering the high volatility of the markets.

Source: Larepublica

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