The war that is raging in Ukraine following the Russian attack continues to cause large increases in various raw materials, given that, due to the increase in the price of oil and gas, added an increase in the value of copper.
The red metal was traded at four dollars and 75 cents a pound on the London Metal Exchange.as confirmed by the Chilean Copper Commission (Cochilco), remaining only 11 cents from its highest price in history.
Faced with this situation, the executive vice president of Cochilco, Marco Riverosindicated that “the scope of this conflict naturally impacts on variables that push the price of copper up.”
“We must take into account that Russia represents around 4 percent of world production, and the economic sanction that has been imposed on it by Western countries, imply the closure of the European and American markets to their product“warned the representative of this commission.
In addition, he assured that this causes that “Expectations of future metal supply shortages rise. Probably the main consuming countries of the metal will also begin to accumulate inventories, which is a force that also has repercussions on the rise.”
For its part, Daniela Desormeauxan economist at Vantaz Group and an expert in mining, stated that copper has also served as a refuge for many investors to this problem in Europe.
“The situation in Eastern Europe, Russia’s invasion of Ukraine, is causing important rises in energy commodities, like natural gas. We know that in Europe 40 percent of its demand for natural gas comes from Russia, and that generates pressure on costs and inflationary pressures,” the expert pointed out.
Along these lines, he warned that the conflict “It also generates an impact on the price of oil, which has also reached historic prices“, and that there is “a more macro effect that has to do with inflationary pressures worldwide, and that makes commodities – in this case copper and gold – also active and attractive instruments as a safeguard.”
CONCERN ABOUT INFLATION FOLLOWS
Another of the economic concerns generated by this armed conflict is inflation, a problem that was already affecting Chile, given that the forecasts for the CPI for February are high and might push inflation to 8 percent in 12 months.
“February inflation is very likely to be between 0.6 and 0.9 percent, bringing annualized inflation to 8 percent, and is part of the arguments for the Central Bank to raise the interest rate at the end of this month“said the economist. Thomas Flowers.
Meanwhile, he said that to this problem “now the war is added and that increases the price of oil substantially and that still cannot be bought within the ENAP prices. In fact, It is likely that you have not bought a barrel of oil during the last eight dayss and therefore the consequence of inflation depends on persistence”.
This Thursday the increases of 6.7 pesos per liter for 93 and 97 octane gasoline, as well as for diesel, were finalized. There are already 28 weeks of consecutive increases.
