The copper price has dropped over 15% since 2 April, closing the week down by 10%. This decline is attributed to an overheated market on the Comex amid tariff concerns.
At the Cesco conference in Chile, views on the copper market differ. The Chilean Copper Commission, Cochilco, expressed caution, suggesting that the price peak may have already been reached this year due to the US-China trade war.
Conversely, Chile’s state copper producer remains optimistic, anticipating strong long-term demand. They reported a slight increase in first-quarter production year-on-year, with an annual target of nearly 1.4 million tonnes, marking a second consecutive year of growth.
The recent sharp downward move in copper prices—more than 15% since early April—hasn’t gone unnoticed. Prices closed the week over 10% lower, with much of that turnaround taking place swiftly, and largely within speculative-driven markets like the Comex. This kind of movement suggests we may have been looking at an overstretched rally, particularly within futures contracts, now unwinding in response to renewed macro pressure. Specifically, heightened trade tension risks between two of the world’s largest economies seem to be fuelling hesitation and tighter positioning.
At the Cesco gathering in Chile, the gulf in sentiment was clear. While some market actors have started to adopt a defensive tone, expecting that the year’s highest copper levels may already be behind us, others retain a considerably more upbeat stance. Cochilco leaned towards the former, signalling caution by highlighting the difficulty in seeing further price gains while geopolitical uncertainties remain unresolved. Their comments imply that strong recent performance may have priced in too much future optimism too quickly.
By contrast, the national producer—Codelco—has maintained steady confidence, pinning their support on projected demand strength rather than current volatility. Their output figures, modest though they may be, indicate growth and operational resilience. For a player of their scale to boost yearly production for a second year running hints at a long-term thesis not being abandoned even as the near-term outlook becomes cloudier.
For those of us watching through the lens of derivatives, these developments change the tone. Volatility levels should be watched carefully; they are likely to fluctuate further as positions are adjusted. That also means hedging strategies could come under review depending on exposure length. There’s now an argument for pausing short-term directional risk-taking, particularly when price discovery across venues is providing less certainty.
Technical setups have lost alignment with earlier bullish momentum, and near-dated options pricing has started implying wider daily swings. Take care also that daily volume behaviour—especially on exchanges with thinner liquidity—can distort broader trends. If spreads begin to show strain or implied vols keep widening, we may need to revisit positions that rely on tight reversion corridors.
In short, short-term enthusiasm has burned hot and fast, and now we’re left assessing whether macro signals justify further commitment in either direction. Monitoring inventory flows, production headlines, and daily settlement data will help inform our position sizing and expiry choices in the next rounds of trades. Dynamic book management may be preferable while directional certainty remains fragile.
