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Copper prices have been relatively tame this year, aside from a large spike in January. That uptick was largely inspired by political unrest in Peru, a powder keg of political instability, as well as the world’s second-largest supplier of copper. Mass protests followed the ousting of the country’s President last December, as demands for new elections were not met. Unrest has since faded but its impact on the country’s output of copper have not.

Additionally, the deadliest Peruvian mine fire in over two decades broke out over the weekend, which could play a role in sparking strife among workers in the country. Mine accidents are not always as deadly as last Saturday’s, suspected to have killed 27, but they are an all too common occurrence in Peru and large-scale incidents could threaten mine output. 

Related ETN & ETF: iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC), Global X Copper Miners ETF (COPX)

Despite a weaker recovery than expected in China’s manufacturing sector, copper has managed to hold onto year-to-date gains of roughly 3.8%, now trading near $3.90 per pound. On a YoY basis, however, the red metal has fallen by more than -6.5%, owing to tightening monetary policy in North America and other regions, as well as slowing economic growth throughout that period. Per a Reuters poll of analysts, Copper prices are due to recover slightly in coming months, but the upside could be curbed by weak physical demand and the threat of a global recession.

Per satellite data, collected by Earth-i, global copper smelting activity fell to a two-year low in April. Earth-i’s copper dispersion index, which covers smelter activity across 80%-90% of production capacity, fell to 44.0, down from 46.8 in March. A sub-50 point reading indicates that smelters are operating below the average level of the past 12 months.

While the supply side has remained relatively tight, the outlook for demand is yet to improve. It is worth noting, however, that the thinner copper output and inventories get, the greater springboard effect those variables may have on prices once demand does begin to recover.

Peru, the world’s second-largest copper producing nation, has been a particular trouble spot for output in 2023. Years of political strife devolved into violent unrest in the streets earlier this year, following the removal of President Pedro Castillo, who attempted to consolidate his mandate and evade impeachment by dissolving the country’s…

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