The world's largest copper producing country closed its borders, copper prices soared, and sellers stopped accepting orders

It is reported that the Chilean government has decided to close its national borders from April 5 to May 1 local time to strengthen epidemic prevention and control. As the world's largest copper producer and the second largest supplier of lithium raw materials, the news that Chile is going to close its borders has also aroused public concerns about the supply of raw materials.

Copper prices rise as Chile closes border

Chile is a major mining country, with copper and lithium supplies accounting for about a quarter of the world's total. Its border closure has attracted great attention from the commodity market. Copper prices have risen in response and have been climbing since Tuesday. It has now broken through the $9,000 per ton mark to $9,104 per ton, hitting its highest point in two weeks.

Although the Chilean Ministry of Energy and Mines responded that the border closure will not affect the normal operation of mining companies, some analysts believe that local copper and lithium exports will inevitably be affected: Chile's border closure will cause shipping delays and may aggravate the supply shortage of basic materials such as copper and lithium in May and June.

The copper market continues to be in short supply, and copper prices will continue to fluctuate at high levels

Experts predict that copper prices will continue to fluctuate at high levels for some time in the future. On the one hand, China's real economy is currently developing well, and the demand for raw materials is only increasing. On the other hand, major copper-producing countries and regions such as South America and Africa are still struggling with the epidemic and have been unable to restore production capacity.

Data from the World Bureau of Metal Statistics showed that the global copper market was in a supply shortage of 1.391 million tons, an increase of nearly 1 million tonnes from the gap of 383,000 tons in 2019 .

The relevant person in charge of the China Nonferrous Metals Industry Association said that the nonferrous industry is in the best situation in more than a decade. According to Shanghai Nonferrous Metals data, on April 6, China's copper price soared by 1,245 yuan per ton, and the average price reached 67,130 yuan per ton.

The upstream price increased but the downstream price did not, and the sellers stopped accepting orders.

This is naturally a good opportunity for the non-ferrous metals industry, but for the majority of sellers, the current situation makes them want to cry: upstream raw material supply is cut off, freight rates are skyrocketing, containers are in short supply, and major chemical giants are raising prices one after another. The downstream can no longer withstand such heavy pressure and has begun to suspend orders and even suspend business and production .

It would be fine if only the raw material prices increased, but sometimes even with the money, there is still a shortage: after the material price increase, the upstream inventory is reduced, coupled with the shortage of labor and the sharp increase in sea transportation costs, the production of manufacturers is unstable, and it becomes extremely difficult to get goods. The overall lithium market is hard to find, and downstream companies can afford to pay, but they can't buy the goods.

Most of the domestic cross-border sellers are at the downstream of the supply chain, and various industries such as home appliances, hardware, and 3C have been deeply affected. Not only because the prices of steel, copper, and aluminum have increased too sharply and the profits cannot keep up with the price increases, but sometimes they have to pay a penalty due to shortages of raw materials and cannot meet the construction period. After being forced to raise product prices, they have to face customer questioning and even reduce orders. Sellers who are caught in a dilemma can only choose to suspend accepting orders.

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