The value of Peruvian copper continues to fall in the world

despite a higher volume of tons exported in the first four months of the year, the value of shipments of Peruvian copper continues to decline due to a drop in its price on the international market, largely explained by the lack of confidence in the recovery of the Chinese market.

In the comparison with the period January-April 2023, our country shipped a total of 814,000 tons of the red metal for US$6,388 million, 0.9% less in value than the 735,800 tons for US$6,449 million registered a year ago. In other words, despite the fact that in the first four-month period 10.6% more tons of copperalmost one percentage point less income was obtained due to the price factor.

And it’s a sustained drop. According to the Ministry of Energy and Mines (Minem) in its Mining Statistical Bulletin, the average price of copper on the London Metal Exchange (LME) was just over 373 cents per pound in May, 9.3% less. than in January and 6.8% less than the end of 2022.

It is not a trance that only Peruvian mining is going through. In Chile, the world’s leading supplier of red metalthe drop in its price depreciated the local currency in that month.

Diego Macera, director of the Peruvian Institute of Economics (IPE), explains that, with levels close to US$4 per pound, copper maintains a high price compared to the last 10 years, and even more so in the last 20, when it was close to US$1 pound.

“We must remember that the prices of most commodities have been falling, both food and metals and energy. This downward trend at the local level explains part of the drop in inflation in Peru and the world in recent months, and copper is no stranger to it”, he graphs.

In this sense, he refers that the main market factor to explain this drop in demand is the weak prospects of the Chinese economy —the first global consumer, destination of 70% of the Peruvian copper exports—, which have been lower than expected.

Still, the situation could improve. Everything depends on whether the new rising prices are found, in the coming months, with a strong copper market at the local level, he explains.

Cold cloths for regions

Until April 2023, the transfers of resources generated by the mining activity, which include the canon, royalties (legal and contractual), right of validity and penalty, totaled more than S/3,018 million.

The president of the National Society of Mining, Petroleum and Energy (SNMPE), Víctor Gobitz, acknowledges that fewer resources enter regions when copper falls, since profitability and payment of taxes —where 50% of the canon comes from— also do. However, he clarifies that no public investment fund will be affected in the short term, since leverage mechanisms associated with low execution subsist.

“It is not that the regions receive the canon and spend it to 100%. The average does not exceed 60% and they are lucky to have accumulated lags that end up being a kind of stabilization fund”, he refers.

More copper will come out than in previous months

According to preliminary figures from the Mincetur Monthly Trade Report (RMC) —which includes official data from Sunat, but whose results do not show an accurate record of assigned shipments—, copper shipments in May reached US$1,868 million FOB, 37, 4% more than in the same month of the previous year.

This, however, suggests that the official figures shown by the Minem In the coming weeks, this same upward trend will continue, both in production and exports, leveraged by the contribution of Quellaveco, which began operations in the second half of 2022.

Copper remains the main exported product of the mining sector, with a share of 31.1% of total shipments.

Copper and a global price drop due to the China factor