Copper prices have slipped on the day after Peru, a top exporter of metal ores, announced that the coronavirus pandemic had caused its production output for copper to plunge by more than 20% on an annualized basis.
Peru is the second-largest copper producer after Chile, and the country says that when compared with 2019, the output for the red metal in 2020 is down by a fifth.
Quarantines were declared in March when the coronavirus pandemic hit the country. This meant that factories and mines had to be closed off. Miners typically work in enclosed spaces with little ventilation; a perfect avenue for the spread of the coronavirus. However, the situation could improve soon as the mining ministry has indicated that production has resumed, with output for July showing a 40% increase over June’s production figure.
In Chile, production volumes have also picked up after the coronavirus pandemic devastated the mining operations in the northern part of the country. Top Chilean copper producer Codelco reported an increase in January to June output of 4.7%. Expectations of further price increases from supply disruptions due to a planned strike did not happen.
Copper price is presently trading 0.29% lower at 2.9085.
Technical Outlook for Copper Price
The copper price activity is occurring within a descending channel consolidation area, as prices retrace following a three-month surge. This resembles the flag component of the bullish flag if price action from May to the present time is considered.
A further slide in copper price would bring the asset into contact with the 2.8695 level. A further move to the south to confront the channel’s lower border would require a breakdown of this level. 2.8020 would then be a natural downside target. A failure of the channel towards 2.7490 invalidates the bullish flag.
On the flip side, a bounce from the lower channel border or the 2.8695 support would allow recovery to continue towards 2.9795. Resolution of the flag pattern in line with technical expectations allows for a push towards the 3.0920 price level, with 3.1865 constituting the endpoint of the measured move of the breakout.