Industrial metals: Chilean copper production to recover significantly next year

Chilean copper production fell 3.6% year-on-year to around 475 thousand tons in October, according to data from the National Statistics Institute (INE). INE attributes this to lower metal contents in the ores. In addition, less material was processed. However, production was noticeably above the level of the previous month and has reached a 4-month high. According to the data, a good 2% less copper was produced between January and October than in the corresponding prior-year period (4.7 million tons). Copper production for the year as a whole is also expected to be below last year's level, which would make it three years in a row of declines. Next year, however, the tide is expected to turn according to estimates by the Chilean copper commission Cochilco: At 5.82 million tons, it is expected to reach its pre-crisis level again.

However, production will fall well short of the record level of 6 million tons previously set by the Commission. This level will be missed due to the introduction of countermeasures to combat the corona virus, lower metal content in the ores, less processing and strikes which impacted production. The return to higher production in Chile in the future will also help drive more copper production at the global level next year: Cochilco forecasts an increase of almost 5%, driven alongside by China, the Democratic Republic of Congo and Peru. Demand growth is expected to lag behind supply expansion, leading to a reduction in the supply deficit. However, the Copper Commission expects the global copper market to remain undersupplied next year (49 thousand tons). Cochilco thus takes a contrary stance to the International Copper Study Group, which assumes a whopping surplus of more than 300 thousand tons.

Source: Commerzbank Research, Photo: Fotolia