Copper prices on the London Metal Exchange (LME) have risen nearly 5% this week, significantly outperforming other industrial metals, according to Commerzbank strategists. This surge is attributed to improved macro sentiment around the Strait of Hormuz and ongoing supply issues at major copper mines [1].
Chilean copper ore production increased to 434,300 tons in March, rebounding from a nine-year low of 378,300 tons in February. However, year-on-year output in March fell by 9%, a sharper decline compared to the 4.9% drop recorded in February. Meanwhile, Indonesia’s Grasberg mine is currently operating at only 40–50% capacity, further exacerbating global supply constraints [1].
Commerzbank highlights that these persistent supply risks could challenge the International Copper Study Group’s (ICSG) forecast of 1.6% growth in mine production for 2024. The strategists emphasize that mining and ore production remain the weak links in the global copper supply chain. Additionally, hopes for a swift reopening of the Strait of Hormuz have improved market sentiment by reducing the risk of a significant slowdown in the global economy and copper demand. However, such a reopening could also alleviate the shortage of sulfuric acid, potentially supporting copper production [1].
CONCLUSION
Copper prices have surged on the back of ongoing mine supply constraints in Chile and Indonesia, with Commerzbank warning that these risks could undermine the ICSG’s growth forecast. Market sentiment has improved due to developments around the Strait of Hormuz, but supply-side challenges remain a key concern for the copper market.