Copper buyers are so worried about future availability of the metal that they’re seeking to secure longer-term deals than normal, according to top miner Codelco. 

The Chilean state-owned company recently signed some contracts for three to five years with customers in Europe, in contrast to the more standard annual deals, Chairman Maximo Pacheco said in an interview. 

Eoin Treacy's view

With battery metal prices like lithium still making new highs, the question of where to source affordable component materials is a pressing concern for many companies. Signing long-term offtake agreements is desirable from that perspective but it also represents hedging on behalf of the miners. That’s not a bad idea at this stage since prices are falling and the global economic outlook is uncertain, particularly with China slowing down.


Southern Copper’s chart pattern is similar to that of the Global X Copper Miners ETF and is firming from the region of the 200-day MA. The share has a dividend yield of 4% while the BBB+ rated 2042 5.25% bond yields 6.59%.

Freeport McMoRan is a BB+ rated credit and the 5.45% 2043 callable bond yields 7%. The share has a dividend yield of 1.81% and is also firming in the region of the 200-day MA.

The risk for the copper sector is China’s economic slowdown persists and internal demand for copper falls enough to justify exports. Since China processes about 41% of all copper and consumers 52% that implies a reduction of 11% in demand to balance the domestic market.