Chinese copper buyers are asking Chilean miners to delay shipments due to the closure of ports by the Chinese government. The action followed the coronavirus outbreak increased the turmoil in world commodity trade.
Víctor Garay, a market coordinator for Cochilco, says that While suppliers have not reported any violation of the agreement, they have verbally agreed with customers to reschedule some deliveries. Cochilco is the copper commission in Chile, which is the world’s largest metal miner.
Just as the airlines don’t want to go to China, the shipping companies don’t either, said Garay in an interview on Wednesday.
Copper combines shipments of everything from oil to crops, which have been interrupted by the spread of the deadly virus originating in China. The country’s largest utility company postponed its plans for some metal purchases last month, and fears that the outbreak will affect industrial activity, have increased a record price drop recently.
Prices on the London Metal Exchange surged for the second consecutive session on Wednesday, advancing 1.9% to the US $ 5,722 per metric ton, hoping that measures against the virus will decrease its economic impact. Copper had fallen for 14 days until Monday, with a fall of about 12% in the period.
Some miners have struggled to physically deliver the metal due to transportation shutdowns and delays in China, Garay de Cochilco said by phone on Wednesday.
Delivery volumes are generally lower at this time of year due to the Lunar New Year festivities, which China extended this time to combat the spread of the virus.
Cochilco still predicts that in 2020 Chilean copper production will increase slightly. As the logistical obstacles are removed in China, miners would need to deliver the supplies.
Garay said that it is better to deliver the mining product. The problem that China is experiencing is a short-term issue. If it lasts a year, the strategy should be changed. Garay says they are following this issue and going to determine it in the first quarter of the year.
So far, the virus has not spread to Chile, but food exporters in the South American country are feeling the effects. Since the explosion of coronavirus, Chinese purchases of foods such as wine, cherries, and Chilean seafood have fallen between 50% and 60%, according to the government export promotion company, ProChile.
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