Chile’s leanest January since 2011 is another bullish copper sign

Production tumbled 15% last month from December and 7.5% from January 2021, the bureau of statistics reported Monday, without giving a clear reason for the drop.

To be sure, Chilean output is typically lower in the new year, and can ebb and flow depending on whether mines are encountering sections of higher or lower quality ore. But there may be more to January’s modest haul of 429,923 metric tons.

Some mines may be catching up on earthworks and maintenance that was postponed during the pandemic. For example, a maintenance program at Chuquicamata smelter will restrict output of refined metal later this year, owner Codelco said on Friday.

After more than a decade of drought, water scarcity may also be playing a role in central Chilean operations, said Juan Carlos Guajardo, who heads consulting firm Plusmining. At the same time, seasonal rains during the so-called highland winter may have impacted some far-northern operations.

Whatever the reason, Chile’s production slump in January — following a drop of 1.9% last year — offers little relief for a global market characterized by low stockpiles and high prices.