Peru, the world's second-largest copper producer, has been plagued by political instability since early December 2022, with protests disrupting production and hitting commodity supply chains. Las Bambas, Peru's third-largest copper mine, has suspended shipments of copper concentrate since January 3 because of safety concerns. Glencore, the global commodities giant, said operations at its Antapaccay copper mine in southern Peru had been suspended since January 20.
Copper production in Chile, the world's largest producer, fell last year due to falling ore grades, water shortages and maintenance problems. Chile's National Copper Commission expects copper production to recover to 5.64 million tons in 2023.
Cao Yang pointed out that the current Peruvian copper production and transportation is more emotional surface to the international copper price stage support. The impact on copper supply from domestic developments in Chile and Peru and the boost to production from mine profitability will continue to be watched.
In terms of the upper, middle and lower reaches of the global copper industry chain, the upstream mining industry is relatively concentrated. Chile, Peru, China, the Democratic Republic of the Congo (DRC), the United States and Australia account for 65.4% of the global copper production. Midstream smelting and downstream demand are mainly concentrated in China, which both account for more than 50% of global capacity and demand.
"That means the weak link in the copper industry chain is at the upstream mining end." "Given Peru's copper supply accounts for about 10% of the world's copper, if the country's copper mining activities continue to be interrupted, there will be a shortage of raw materials for midstream smelting," Zhan said. "The risk of supply-side uncertainty is much greater than the demand side, which will inevitably push up copper prices, and thus greatly push up the cost of downstream demand."
