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The Chilean Copper Commission (Cochilco) announced on Tuesday (April 23 local time) that the country’s copper production is expected to reach a record 5.8 million tons by 2025. According to a statement from Cochilco, this production is projected to increase by 6% compared to the expected 5.5 million tons for this year. Additionally, demand from China has stalled after a rebound in copper prices, posing a risk of a price pullback.
Joaquin Morales, Executive Vice President of Cochilco, stated that the forecasted production for the next two years exceeds the annual average production of the past decade, signaling the beginning of a “recovery period” for Chilean copper mining.
Chile controls nearly a quarter of the global copper market. However, in the past two years, the production of Chilean copper mines has been impacted, leading state-owned mining giant Codelco to reduce its output to the lowest level in 25 years due to project delays.
Canadian mining company Teck Resources‘ copper mines are expected to experience a production rebound this year, followed closely by Australia’s BHP Group.
Furthermore, copper is facing a test amid a strong rally approaching the $10,000 per ton mark, as buyers in China, the world’s largest market, hesitate to accept prices close to the highest point in nearly two years.
In recent weeks, copper prices have surged due to investors’ optimistic outlook on the global manufacturing industry’s recovery and prospects of tightening mineral supply. However, skeptics have pointed out weaknesses in the Chinese market, including claims that Chinese copper processing companies are increasingly reluctant to accept higher prices.
Earlier this week, copper prices on the London Metal Exchange nearly surpassed $10,000 per ton, capping off a strong rally in April, which further fueled bullish predictions of long-term substantial price increases. However, copper prices subsequently declined, with a drop of 1.8% at the close of trading on Tuesday.
The director of copper business at Citic Metals Co., stated that there is only a small level of demand from the renewable energy industry, with limited demand from other markets. Manufacturers are awaiting a price correction to catch a breather.
Other market data also indicates weak demand. Chinese smelters are also exporting refined copper to the tighter overseas market.
