As rapidly as flash floods inundated mines and blocked roads in Chile, the world’s largest copper mining country, copper prices spurted by about 10 per cent to breach the $6,000 a tonne levels on the LME (London Metals Exchange).

The recent torrential rains and power outage in parts of Chile have disrupted mining operations in the Atacama desert region which is home to over half of Chile’s copper mines and accounts for close to two-third of national production.

Chile accounts for close to 6 million tonnes of mined copper output annually, which is nearly a third of the global output. Disruption to communication lines has exacerbated the situation. According to experts, one week’s disruption would mean loss of 70,000 tonnes output.

On Thursday March 26, LME cash copper reached a recent high of $6,196/t before edging lower to $6,079/t on Friday close of trading. The metal was languishing at around $5,500-5,700 a tonne for several months for reasons like a stronger dollar and slowdown in Chinese industrial activity. Speculative capital went out of the market in anticipation of the unexciting demand. A year ago, the metal was trading at $6,500/t. With China moving away from an investment-driven to a consumer-led economy, consumption of metals is expected to slow. However, one sector where copper consumption will continue to remain robust is the power grid in which the Asian major continues to make huge investments.

Indeed, the world market is now looking closely at India for signs of a strong pick up in demand. Higher investments in power generation as envisaged in the recent Budget are seen as positive signals for an uptick in demand. Although for the present Indian consumption is way below that of China’s, in the next couple of years, demand growth is set to gather pace with policy emphasis and higher outlay for power generation.

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