Chilean disaster leads to increase in copper prices due to supply shortage
In the world of mining, a tragic event at Chile's El Teniente mine, the largest copper producer, has sent shockwaves through the industry. Last week, a seismic event led to a collapse that claimed six lives and temporarily halted operations at the mine, which produced approximately 356,000 tons of copper in 2024 [4]. This closure has raised significant supply concerns, supporting higher copper prices despite broader economic worries [4].
Elsewhere, Mitsubishi Materials in Japan is facing a severe margin crisis and is contemplating scaling back copper concentrate processing at its Onahama smelter and refinery. This potential reduction in processing capacity may constrain regional copper cathode supply, forcing manufacturers to seek alternative sources, increasing reliance on Chinese processing capabilities [2][4].
These disruptions have exacerbated the tightness in the copper market, leading to a likely supply deficit in 2025. Despite a slight surplus of refined copper reported earlier in the year, these disruptions have made the situation more critical [1][3]. Furthermore, lower mined copper production from other global sources—such as the temporary shutdown at the Ivanhoe-Zijin Kakula-Kamoa mine in the DRC—has contributed further to the constrained supply outlook [1][3].
Demand for copper remains strong, particularly from China, which consumes about 58% of global copper. Despite a decline in net refined imports, emerging sectors like AI data centers and the energy transition are intensifying stress on copper supply [1][3].
The impact of these supply disruptions and macroeconomic uncertainties is evident in the regional price premiums and supply chain challenges, especially in Asia. Ongoing volatility is anticipated due to these factors [2][4][5].
On the London Metal Exchange, the three-month copper added 0.6% to $9,685 a metric ton. Similarly, the most traded copper contract on the Shanghai Futures Exchange gained 0.1% to 78,330 yuan ($10,915.70) a ton. Meanwhile, nickel rose 0.5%, tin edged up 0.2%, and lead remained relatively unchanged. U.S. Comex copper futures edged up 0.1% to $4.44 per lb [4].
In a separate development, Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, stated that the weak jobs data suggests a sharp deterioration in labor market conditions [5].
The mining minister in Chile stated on Sunday that officials would determine when it is safe for operations to resume at the El Teniente mine. Until then, the copper market will continue to grapple with the tight supply and the potential ongoing deficit in 2025, pushing prices higher and stressing global supply chains [1][2][3][4][5].
- The tragic event at Chile's El Teniente mine, the largest copper producer, has sent shockwaves through the industry, potentially causing a supply deficit in 2025.
- Mitsubishi Materials in Japan might scale back copper concentrate processing, further constraining regional copper cathode supply and increasing reliance on Chinese processing capabilities.
- Demand for copper, particularly from China, remains strong, with sectors like AI data centers and the energy transition intensifying stress on copper supply.
- Ongoing volatility in the copper market is anticipated due to supply disruptions and macroeconomic uncertainties, especially in Asia.
- On the London Metal Exchange, the three-month copper added value, with similar gains reported on the Shanghai Futures Exchange and US Comex.
- Despite broader economic worries, the closure of the El Teniente mine and lower production from other global sources are supporting higher copper prices.
- In the world of finance, assets such as NFTs and ETFs might offer alternative investment positions amidst the tight copper market and potential ongoing deficit.
- The growth of the DeFi industry and the increasing interest in cryptocurrencies could provide new opportunities for investors looking to mitigate the effects of supply disruptions in traditional markets like mining and metals.
