According to the latest news from foreign media, the global copper supply pattern is undergoing a major shift. Due to mine closures and production disruptions, many analysts have begun to downgrade their oversupply forecasts, which is undoubtedly a positive sign for copper prices.
On Friday, copper futures on the London Metal Exchange hit a four-month high of $8,640 a tonne. This was partly due to Anglo American lowering its production guidance. The London-listed miner said copper production next year was expected to be in the range of 730,000-790,000 tonnes, a 20 per cent cut from its previous estimate. The company also cut its 2025 production forecast by 18 percent.
Anglo American is currently carrying out maintenance and maintenance at its Los Bronx plant in Chile, while its Cuilavecco copper mine in Peru has also made corresponding adjustments to ensure safe passage of geotechnical fault lines. Macquarie analyst Ellis Ellis Ms Fox said Anglo's new guidance for 2026 was well below her forecasts. In addition, Vale also issued new production guidance, again below market expectations. This means that if demand remains unchanged, the outlook for copper prices will be more positive.
Brazil's Vale expects to produce between 320,000 and 355,000 tonnes of copper in 2024, compared with 325,000 tonnes this year. Macquarie now expects the global copper market to be oversupplied by 100,000 tonnes in 2024 and 287,000 tonnes in 2025, down from its previous forecast of 203,000 tonnes and 369,000 tonnes. Global copper production is expected to reach about 27 million tonnes next year and in 2025.
In addition, production disruptions at First Quantum's Cobre copper mine have attracted a lot of attention from the market. The mine accounted for 1 per cent of the world's copper supply last year. The mine's future is uncertain as Panama's Supreme Court last month declared the First Quantum operating contract unconstitutional. Michael Smith, an analyst at Bank of America Weidmer has removed Panamax from its copper supply forecast for next year and changed its forecast for the balance of supply and demand from a small surplus to a shortage. It seems unlikely that Cobre will reopen before Panama's general election in May 2024 at the earliest, he said. He also noted that once a new government is formed, First Quantum could start negotiating contracts with that government. While the election may bring changes, we are now assuming that the Cobre mine will likely restart in the fourth quarter of next year.
In the overall market environment, as supply tensions increase, the impact on copper prices will be positive, especially after Anglo American announced a cut in production targets. This not only brings a new balance to the market, but also provides strong support for future price action.
