Chile’s copper boom levels off: a signal for the global economy?

Copper is a bellwether for the global economy given the metal’s fundamental uses in manufacturing. What is it telling us about the aftershocks of war in the Persian Gulf?

Export figures from Chile, the world’s no. 1 copper producer, provide a weekly indicator. It suggests that a historic boom might be levelling off.

We’ve charted year-on-year growth rates for various categories of Chilean copper shipments, which recently touched the highest since the post-pandemic snap-back era of 2021. This coincided with prices soaring to records, driven by the metal’s special importance to clean power and the AI boom.

However’ Chile’s copper export growth rate has steadily retreated as the conflict persisted through March. (Copper prices faded in March, too — but only to December levels.)

The flipside to the demand story is supply constraints; Chile’s state-owned mines are aging. As our second chart shows, however, the price boom means falling production hasn’t hurt Chile’s exports in value terms.

We’ve added two more charts worth watching as the Iran war’s effects trickle down through the global economy. The number of ships visiting Chilean ports linked with copper exports peaked in January; while still historically at very high levels, weekly vessel traffic has been ticking downward.

The Shanghai futures market for copper shows a changing trend since the war began. Prices for short-term delivery versus those for six months out have converged; in January, it was notably cheaper to take immediate delivery — perhaps reflecting the concerns about near-insatiable demand and constrained future supply that were sending copper prices to records at the time.