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Copper Edges Higher on Lower Chile Output, US-China Trade Optimism

November 5, 2019 at 16:21 by Andrew Moran

Copper futures are edging higher on Tuesday after one of the world’s biggest producers of the red metal cut its output forecast. The industrial metal also rose on US-China trade optimism that would be a boon for copper demand. This comes as China reported solid factory activity data and the US posted disappointing factory numbers. Can copper prices stay well above $2.75 to finish off the year?

December copper futures added $0.02, or 0.77%, to $2.69 per pound at 15:02 GMT on Tuesday on the Comex division of the New York Mercantile Exchange. The red metal has enjoyed a tremendous three months, advancing nearly 6%. Year-to-date, copper is up about 2%.

Chile has been rocked by nationwide protests as demonstrators take to the streets and showed their frustrations with the government over the rising cost of living. As a result, Antofagasta reduced its production forecast by double to roughly 10,000 tons. The company has already seen supply interruptions as the union leadership went on a one-day strike in solidarity with the protesters. Things are so bad in Chile that the Asia-Pacific Economic Cooperation (APEC) summit has been canceled.

This should send international supplies lower in the short-term.

In other industry news, Freeport-McMoran is projected to see a 90,000-ton jump in annual production by introducing artificial intelligence at its mines. One of the world’s largest copper producers plans to install machine learning technology at all its American mines, potentially lifting global output by 5%.

Investors are optimistic about a potential trade agreement between the US and China. Both sides are showing all the signs that they will soon sign the first phase of a comprehensive trade deal. Should the two sides move closer to ending the 18-month-old spat, then it could rejuvenate global commerce and stimulate the economy, which is positive for the industrial metal.

In China, factory activity expanded at the fastest pace in more than two years last month, driven by increased production and a rise in new export orders. By comparison, new orders for US goods slipped more than expected in September as business spending on equipment was weaker than initially anticipated.

On the fundamental side, copper in the Chinese-bonded warehouses declined to an all-time low of 243,500 tons this month.

In other metal markets, December gold futures plunged $23.50, or 1.5%, to $1,487.60 per ounce. December silver futures cratered $0.43, or 2.39%, to $17.635 an ounce. December platinum futures tumbled $4.60, or 0.49%, to $934.10 per ounce. December palladium futures shed $10.40, or 0.59%, to $1,742.40 an ounce.

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