Operational incidents and downward revisions in production forecasts are tightening supply and driving copper prices higher. Analysts expect the upward trend to persist in the medium term.
By Cristóbal Muñoz
A significant milestone for the copper market was highlighted this Thursday by Chile’s Ministry of Mining: a new all-time price record for the red metal.
According to the Chilean Copper Commission (Cochilco), the spot price of copper reached US$4.93 per pound, the highest level ever recorded in its database, reflecting prices from the second morning trading session on the London Metal Exchange (LME).
So far in 2025, copper has accumulated a 25.1% increase, with an average of US$4.34 per pound.
Underlying Drivers
Through its official account on X (formerly Twitter), the Ministry attributed this surge to two main factors:
A decline in expected global supply for 2025, caused by production disruptions at three of the world’s largest copper mines.
A depreciation of the U.S. dollar over recent weeks, which has stimulated international demand for the metal.
Juan Cristóbal Ciudad, Senior Market and Industry Analyst at Plusmining, explained: “Global supply remains constrained, affected by operational interruptions and incidents at major mines such as the accidents at El Teniente in Chile and, more recently, Grasberg in Indonesia—the world’s second-largest copper mine. Additionally, Teck’s recent downward revision to production guidance at Quebrada Blanca, combined with the lack of new large-scale projects in recent years, further tightens the market balance.”
According to Cochilco, the incident at El Teniente resulted in a 25% reduction in Codelco’s copper output in August.
Meanwhile, Christian Cifuentes, Senior Analyst at the Center for Copper and Mining Studies (CESCO), noted that beyond recent accidents, “This environment has been developing for some time. Medium-term forecasts have consistently pointed to a structural imbalance, with lower supply growth and high demand linked to the global energy transition. This has made market reactions particularly volatile.”
Ciudad also addressed the role of the U.S. dollar, stating: “A weakening dollar, combined with expectations of a more expansionary monetary cycle and potential interest rate cuts, has strengthened investor appetite for commodities such as copper.”
Medium-Term Outlook
While the recent price surge reflects a clear tightening of supply, analysts remain cautious about future movements. “It is still too early to speculate on price behavior,” Cifuentes emphasized. “What is clear is that supply constraints will persist this year and likely into next year, making it complex to determine whether current price levels will hold in the medium term.”
Ciudad, however, projects that the balance between production and demand will remain tight, “potentially leading to moderate deficits toward the second half of the decade, especially if new projects face commissioning delays or if further operational disruptions occur.”
He concluded that, “This scenario suggests that prices could remain elevated, though accompanied by greater volatility due to the evolving macroeconomic, financial, and geopolitical context.”
Source: Diario Financiero