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Protests throughout Peru have worsened in recent weeks, potentially restricting access to the country’s copper supply, according to Bloomberg. The Las Bambas mine, which is responsible for approximately 2% of the world’s copper mine supply, has seen transport of copper concentrates impacted by road blockades, according to Reuters. Last Friday, Glencore announced that they had suspended operations at the Antapaccay copper mine after the 3rd attack on the facility in a month. Moreover, transport officials recently told Reuters that protestors have blocked roads in 18 of 25 of the country’s regions. The ongoing protests began in early December when then-President Pedro Castillo was impeached and arrested on corruption charges. At 2.2 million mt, Peru was the world’s second-largest copper miner in 2021, according to USGS data. (Source: Reuters, Bloomberg, USGS) |
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AEGIS notes that supply chain issues in Peru could remain supportive of copper prices. The LME Copper 3M Select last traded at $9,382/mt (7:00 AM CST) and is up over 12% so far this year. Even with the recent rally, this still could be a good opportunity for end-users to hedge future needs into 2023 and beyond by buying swaps. Such positions are standard for consumer hedging; however, they can result in opportunity costs or cash costs if metal prices decrease. Please contact AEGIS for specific strategies that fit your operations. (1/23/2023) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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AEGIS Insights |
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01/18/2023: AEGIS Factor Matrices: Most important variables affecting metals prices 01/11/2023: Nickel Prices Could Remain Volatile Into 2023 12/21/2022: Nickel Prices Rally While 2023 Supply Picture Remains Unclear 12/14/2022: Could Peruvian Protests Affect Zinc Production or Prices? 12/07/2022: Does the Copper Rally Have Legs? |
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1/21/2023: Glencore halts operations in Peru due to violent protests 1/21/2023: Over 50 injured in Peru as protests cause 'nationwide chaos' |
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Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.
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