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BMO: Peru copper hit worse than Chile by COVID-19

The COVID-19 pandemic saw copper exports from Peru and Chile fall in the first quarter, though the neighbours and competitors fared very differently, according to a research note by Colin Hamilton of BMO Capital Markets.
BMO: Peru copper hit worse than Chile by COVID-19 BMO: Peru copper hit worse than Chile by COVID-19 BMO: Peru copper hit worse than Chile by COVID-19 BMO: Peru copper hit worse than Chile by COVID-19 BMO: Peru copper hit worse than Chile by COVID-19

Copper cathodes from Codelco in Chile

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Peru fared worse as it imposed a strict quarantine and greater restrictions on movement than Chile imposed. There mines largely continued operating.

Peru's concentrate exports to China dropped 16% year-on-year as large mines such as Las Bambas, Toromocho and Freeport McMoran's Cerro Verde saw their operations restricted. On an annualised basis, Peru's copper production fell 12% year-on-year to 2 million tonnes per annum in the first quarter, with March seeing a 27% year-on-year drop as mining restrictions bit.

Chile, by comparison, battled through rather unscathed as its copper concentrate production rose 4.8% year-on-year to 5.5Mtpa, although from a low base in 2019. Refined copper output also rose 12% year-on-year with March exports 4% above the trailing 12-month average.

With concentrate exports from Peru interrupted, China turned to other countries for supply such as Armenia, Mexico, Kazakhstan and DRC, however, supply from Chile is expected to rebound strongly.

"With the Chinese economy now firmly in recovery mode, and the rest of the world still weak, we anticipate that China may take as much as 75% of Chilean concentrate exports over April-June, and the majority of refined copper exports. Just as with other markets, China will be ramping up raw material imports as the rest of the world is weak," wrote Hamilton.