FX.co ★ Copper Rises on Declining Chile Output

Copper futures rose above $6.25 per pound on Tuesday, edging back toward three-week highs as output in Chile declined amid a mix of structural and operational challenges. Production has been hit by water shortages, falling ore grades, unplanned maintenance, the shift from oxide to sulfide mining, and labor disputes.

Chile’s monthly economic activity index has logged consecutive declines this year, largely reflecting weaker mining performance and lower copper production across several major sites. The country accounts for roughly 50% of global copper exports, and copper contributes more than 10% of Chile’s GDP.

Prices advanced even as investors increasingly expect the US Federal Reserve to raise interest rates this year to curb inflation. At the same time, traders are closely tracking escalating tensions in the Middle East, where a demand shock is helping to counterbalance worries about potential supply disruptions.