Chile quake pushes copper prices up

KOLKATA: Global copper prices jumped to three week highs following concern over supplies after an earthquake rocked the copper producing region of Chile, the world's largest producer of the red metal. Spot prices of copper on the benchmark London Metal Exchange (LME) went up to $6,729 per tonne after the quake hit on Tuesday, before easing 0.6% to $6,632 per tonne on Thursday. However, domestic copper majors, like, Sesa Sterlite and Hindalco have little reason to worry.

Analysts pointed out that both these companies rely on imports of copper concentrates and mainly act as conversion agents. The charges for conversion are fixed and built into the price of concentrates.

“The spike in global copper prices will not have any impact on Sesa Sterlite or Hindalco. Their earnings depend upon treatment and refining charges (TC/RC) embedded in concentrate prices,” Bhavesh Chauhan, metals sector analyst at Angel Broking said. Processing charges are subject to fluctuations, depending on global supply of concentrate.

Hindustan Copper, which is the only primary producer of copper in the country, is also not likely to be affected by it. In fact copper prices have already begun to fall with reports from Chile indicating there has been no major damage to any copper mine or asset due to the quake which struck the copper exporting port of Iquiqe. On Thursday, copper for delivery in three months dropped around 0.6% to $6,632 per tonne on the LME.