Copper Price Spike Likely As El Nino Weather Conditions Develop

Copper  |  2026-06-30 00:32:37   |   By

Other commodities are also at risk of being affected by an El Nino which results from above average temperatures in the Pacific Ocean which can distort normal weather patterns.

SEATTLE (Scrap Monster): The price of copper is poised to spike sharply higher as a powerful El Nino weather event develops in the Pacific Ocean which could trigger floods in Chile and Peru, two of world’s biggest copper producers.

Other commodities are also at risk of being affected by an El Nino which results from above average temperatures in the Pacific Ocean which can distort normal weather patterns.

Food Supply At Risk

Most interest in this year’s El Nino has been in how it might reduce crop yields in Asia by creating drought conditions around the western Pacific with reports of crop failure in the Highland region of Papua New Guinea an early warning of a potential regional food crisis.

But it’s the effect of an El Nino on metals which represents a trading opportunity for investors because too much rain, or too little, can cut output.

In the case of copper any reduction in supply from flooding in Peru or Chile will add to already tight conditions which lifted the copper price earlier this year to an all-time high of $6.50 a pound, before easing recently to around $6.10/lb.

Strong demand from the data center building boom and the electrification of everything is underpinning one side of the copper-price equation while mine incidents and accidents (outages) have put a lid on supply growth.

An El Nino weather event could supercharge the copper price especially if it becomes as powerful as some forecasts are predicting.

Denmark’s Saxo Bank said in a research note earlier this month that forecasts suggest a moderate to strong event later this year.

“The last major El Nino episodes, including those in 1997-98 and 2015-16 had significant impacts on agricultural production, energy markets and mining operations worldwide,” Saxo said.

NOAA Confirms Strong El Nino

The U.S. weather agency, the National Oceanic and Atmospheric Administration (NOAA) last week confirmed El Nino conditions, raising the probability of a very strong event to 63% for the period from November to January with indications that it could be the strongest on record.

Morgan Stanley told clients that its commodities team believed copper is the metal at greatest risk of supply disruption because of El Nino related events in South America and in the African copper belt.

“Chile could face flood, mudslides, and infrastructure risk, while Zambia (in southern Africa) faces drought and hydroelectric power shortages,” the bank said.

Other risks to metal production from El Nino include the potential for aluminum and zinc shortages caused by low water levels in hydroelectric dams in China’s southern Yunnan province.

Lithium output in Chile could potentially be affected by high rainfall in drying ponds, while iron ore exports from Brazil are at risk from port delays.

Saxo said that after several years dominated by geopolitical disruption, trade tensions and shifting monetary policy expectations weather was once again emerging as a key market driver.

Courtesy: www.forbes.com