Southern Copper warns US-China trade war could hit copper in short-term

Grupo Mexico’s Southern Copper mining unit believes the US-China trade war will hit the global economy, affecting the copper sector, CFO Raul Jacob said on a call with analysts on Wednesday to discuss quarterly results.

“We believe an intense commercial war between the US and China will affect economic growth worldwide,” he said.

However, chief financial officer Jacob said he expected the industry to be resilient in the long-term. “We maintain a positive long-term outlook for copper,” he said.

Jacob added that the large price difference between the US Comex exchange and London Metal Exchange (LME) indicated a “strong possibility” of US tariffs on copper imports. The Trump administration has said it will implement a 50% tariff starting on Friday.

Southern Copper is the third-biggest copper producer in Peru, which is itself the third-largest global producer of the red metal.

Peru is among the top providers of refined copper to the United States, although the majority of its exports are directed to China.

Jacob said there was still uncertainty around the details of the tariffs, or how they could impact the company, and noted that US-imposed tariff levels on other goods and countries have been fluctuating.

“It’s very hard to predict at this point what is going to happen,” he said and declined to comment on the impact from the price difference between Comex and the LME.

Grupo Mexico chairman German Larrea in a statement accompanying results this week said the company was monitoring whether tariffs would impact the business but that Southern Copper was in a solid position to navigate the uncertainty.

(By Daina Beth Solomon and Marco Aquino; Editing by Brendan O’Boyle)