Copper markets are facing tightening supply conditions, according to ING analysts Ewa Manthey and Warren Patterson, as Chile reported its lowest monthly copper output in nearly nine years. February production dropped to 378,554 tonnes, marking an 8.5% month-on-month and 4.8% year-on-year decline, based on INE data. The last comparable output was in March 2017, when strikes halted operations at BHP’s Escondida mine. Chile, responsible for about a quarter of global copper mine supply, has experienced annual output declines for seven consecutive months, highlighting persistent structural constraints such as declining ore grades and underperformance at key mines [1].
Additionally, Ivanhoe Mines has reduced its production guidance for the Kamoa-Kakula mine. The 2026 outlook was lowered to 290-330kt from 380-420kt, and the 2027 forecast was cut to 380-420kt from 500-540kt. This adjustment follows a shift to a more conservative mining plan after flooding impacted operations last year [1].
On the speculative front, the latest LME COTR report shows a reduction in net long positions for copper and zinc, with copper net longs falling by 2,302 lots to 38,729 and zinc net longs declining by 4,393 lots to 40,171 after two weeks of gains. In contrast, aluminium net longs increased by 1,285 lots to 82,987, breaking a six-week streak of declines, as tight global supply supports bullish sentiment in aluminium [1].
The combination of supply constraints in copper and shifting speculative positioning suggests heightened volatility and potential upward pressure on prices, especially as Chile’s output continues to decline and Ivanhoe’s guidance cuts further limit future supply [1].
CONCLUSION
Copper supply is tightening due to Chile's prolonged output slump and Ivanhoe's reduced production guidance at Kamoa-Kakula. These developments, alongside shifting speculative positions, are likely to increase market volatility and support higher copper prices. Investors should monitor ongoing supply disruptions and speculative activity for further market direction.