Chile’s Copper Boom May Soon Turn to Bust

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The shine may soon come off Chile’s decade-long copper boom as technical and regulatory problems in getting new mines into production highlight just how hard it will be to keep ratcheting up the supply, Reuters reported.

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Chile is expected to produce a record 5.83 million tons of copper this year, rising to 6.23 million next year, state copper commission Cochilco forecast on Friday. Many in the industry are confident new mines will keep boosting supply, but are worried more by falling demand in the key buyer, China.

The optimism over output may be misplaced. Already, the official estimate for production in 2014 has been downgraded twice, cut from 6.07 million tons – a drop equivalent to the output of a medium-sized mine – after teething problems at 3 new projects and falling output at older ones.

And soon the growth of recent years will likely grind to a halt, industry experts say.

Dropping 1.3%, the cash price of Japanese copper was the biggest mover on Wednesday, October 22, closing at JPY 737,000 ($6,769) per metric ton. After a 1.1% increase, the price of US copper producer grade 110 finished the day at $3.74 per pound. The price of US copper producer grade 122 increased 1.1% to $3.74 per pound. At $3.93, the price of US copper producer grade 102 finished the market day up 1.0% per pound.

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Chinese copper prices were mixed for the day. The price of Chinese copper bar increased 0.6% to CNY 48,840 ($7,952) per metric ton. The Chinese copper cash price gained 0.6% to finish at CNY 49,040 ($7,985) per metric ton. The price of Chinese copper wire held steady at CNY 50,395 ($8,205) per metric ton. The price of Chinese bright copper scrap remained essentially flat at CNY 44,300 ($7,213) per metric ton.

On the LME, the 3-month price of copper rose 0.8% to $6,620 per metric ton. Also on the LME, the cash price of primary copper inched up 0.7% to $6,658 per metric ton.

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