Copper prices have declined by approximately 5% from their mid-May highs, a move attributed primarily to increased risk aversion stemming from rising oil prices [1]. Despite this downward pressure, supply-side factors are providing some support to copper prices. In April, China’s copper production fell by 4.5% compared to March, though it remained 3% higher than the same period last year [1].
Further tightening in supply is evident from the mining sector. Chile’s copper commission, Cochilco, has revised its outlook for mine production in the world’s leading supplier country, lowering expectations for this year by 2% to 5.3 million tons due to low ore grades and operational difficulties following disappointing first-quarter results [1]. For 2025, Cochilco anticipates a modest recovery, projecting a 4% increase to 5.5 million tons [1].
In Indonesia, mine production has also been underwhelming. The restart of operations at the Grasberg Mine, the world’s second-largest copper mine, is progressing more slowly than anticipated. Full production capacity is not expected to be achieved until the end of 2027 [1].
These supply constraints are helping to offset some of the negative sentiment from risk aversion, suggesting that while copper prices have recently fallen, the market remains supported by sluggish supply growth.
CONCLUSION
Copper prices have recently declined due to increased risk aversion, but weaker supply growth from major producers like China, Chile, and Indonesia is providing a floor for prices. Market participants are likely to monitor supply developments closely, as ongoing constraints could limit further downside.