LONDON (Reuters) – It’s turning out to be a bad year for copper supply. Both mined and refined production fell in the first half of the year, according to the International Copper Study Group (ICSG). What was always going to be a year of weak supply growth has been made worse by a stream of supply disruptions.
At other times such production woes would have been a red flag for copper bulls, who like nothing more than trading copper’s notoriously volatile supply side. This year, however, falling production is doing no more than preventing the copper price falling further.
At $5,665 per tonne London Metal Exchange (LME) three-month copper is a long way off April’s highs above $6,600 and is now down by 3% on the start of January. The problem is that copper demand is faring just as badly as supply, with manufacturing activity contracting just about everywhere.
World mine production fell by around 1.4% in the first half of 2019, according to the ICSG’s latest monthly statistical bulletin. Concentrates output declined by 1%, while straight-to-metal SX-EW (solvent-extraction-electrowinning) mines produced 3.5% less than last year.
Some of this was expected, such as the 55% decline in Indonesian production, where both the Grasberg and Batu Hijau mines are transitioning between ore bodies. However, unexpected supply disruptions have also been accumulating.
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