Chile’s robust, flexible fiscal and macroeconomic policy frameworks are an important buffer against falling copper prices, Fitch Ratings says. Low public debt and significant resources in its stabilization funds also underpin shock-absorption capacity. But lower copper prices present downside risks to investment and growth, and highlight structural challenges, including the economy’s narrow base.
Reuters reported that Chile’s commodity dependence is more evident in its external accounts (copper made up 51% of exports in 2014) than its fiscal accounts. The fiscal framework buffers spending from cyclical swings in copper prices by basing budgets on a long-term copper price estimate, $3.07/pound in the 2015 budget.
At JPY 703,000 ($5,972) per metric ton, the cash price of Japanese copper moved up 2.0% on Tuesday, January 20, making it the day’s biggest mover. The price of US copper producer grade 110 steadied at $3.36 per pound following two-days of increases. The price of US copper producer grade 102 ended a two-day climb, settling at $3.55 per pound. The price of US copper producer grade 122 flattened at $3.36 after two days of improvement.
Chinese copper prices were mixed for the day. The price of Chinese copper bar declined 0.7% to CNY 42,600 ($6,852) per metric ton. The cash price of Chinese copper fell 0.7% to CNY 42,800 ($6,884) per metric ton. Chinese copper wire closed 0.4% lower at CNY 41,780 ($6,720) per metric ton. At CNY 37,000 ($5,951) per metric ton, the price of Chinese bright copper scrap was essentially unchanged.
The cash price of primary copper rose 0.3% yesterday on the LME, just off the 30-day low of $5,670 per metric ton it hit on Friday, January 16. After falling 0.1% to $5,642 per metric ton, the copper 3-month price reached a 30-day low on the LME.