Chile, the world's largest producer of copper, reduced on Thursday its price projection for the precious metal for 2019 from $3.05 to $2.89 per pound due to a drop in demand from the planet's largest consumer, China.
In its second-quarterly report the Chilean Copper Commission (COCHILCO) also reduced its 2020 projection from $3.08 to $2.90 a pound, it said in a statement.
The drop is because China "is experiencing a cycle of economic slowdown that has undermined expectations for short-term demand," said the statement.
That was exacerbated by "macroeconomic and global geopolitical tensions that have reduced the projections of worldwide growth," largely due to a trade war between China and the United States, COCHILCO said.
This "increased the risk aversion of commodity investors, who ignored the fundamental aspects predicting a copper deficit this year," said Jorge Cantallopts, COCHILCO's director of Public Studies and Policies.
A deficit of 197,000 tons of refined copper, equivalent to 0.8 percent of annual consumption, is expected this year.
Cantallopts said he expects global copper production of around 20.85 million tons this year, a 0.4 percent drop on 2018, driven by falling production in China and Indonesia as well as Chile.
Projected global copper demand this year is 23.98 million tons, a 0.9 percent increase on 2018.
Chile will likely end 2019 with a production of around 5.8 million tons, similar to last year's level.