Chilean Earthquake and Copper

A subscriber wrote in today asking about the impact of the recent Chilean earthquake on copper prices.

There has been a spike in copper prices today, but this is likely to be short lived.  Power has already been restored to some of the mines affected by outages, roads serving mining operations are reported to be in good condition, and there isn’t any major damage reported to the mines themselves.  

This chart comparing the monthly copper futures price following major earthquakes in Chile over the past few years shows that they don’t appear to have a decisive impact on the pricing trend.   The longer term trends usually swamp any short term blips due to random events such as earthquakes.  We do expect higher prices in 2010, but this is more due to general economic trends.