Key Takeaways:
LME three-month copper rose 1.4% to $14,360.50 per tonne, nearing the record $14,527.50, as major miners cut Q2 output 3.9% year-over-year.
"Mine supply risks are clearly skewed to the downside," Jefferies analysts wrote in an Aug. 16 production tracking report covering miners that account for about 55 percent of global mine supply.
The 3.11 million tonnes produced in Q2 by tracked miners fell 3.9% year-over-year, with Ivanhoe Mines down 43%, Newmont down 53%, Freeport-McMoRan down 18%, Antofagasta down 11% and BHP down 5%. LME copper spot traded at a $478-per-tonne premium over the three-month contract, the widest since 2021, as tariff-driven shipments to the US drained deliverable inventory from other regions. Copper has gained about 16% year-to-date and is on track for an eighth consecutive weekly gain.
Jefferies forecasts a 442,000-tonne global copper deficit in 2026, widening to 782,000 tonnes by 2030, with grid and EV demand growing at 5.0% and 9.6% annually respectively. The bank sees copper averaging $13,380 per tonne in 2026, $14,330 in 2027 and $17,637 by 2030.
BNP Paribas metals analyst David Wilson attributed the record spot premium to a structural distortion: as long as shipping copper to the US remains profitable ahead of the Trump administration's tariff decisions, incentives to deliver into LME warehouses weaken. Monday's premium — the widest since the 2021 short-squeeze episode — reflects a shortage of deliverable inventory in Europe and other regions. The six base metals traded on the LME all advanced Monday, with aluminum up 0.5% and zinc up 0.7%.
The production drop was concentrated among the largest producers. Ivanhoe Mines' Kamoa-Kakula complex in the Democratic Republic of Congo fell 43% to 64,000 tonnes, while Newmont's copper output dropped 53% to 17,000 tonnes. Freeport-McMoRan produced 357,000 tonnes, down 18%, Antofagasta delivered 142,000 tonnes, down 11%, and BHP's 492,000 tonnes marked a 5% decline. Operational disruptions, declining ore grades and project execution issues drove the shortfalls, Jefferies said.
Some miners bucked the trend. Zijin Mining grew output 8.6% to 239,000 tonnes, Teck Resources rose 24% to 136,000 tonnes, and MMG posted 138,000 tonnes — but those gains did not offset the majors' losses.
Jefferies pushed back against market views that new projects — Kamoa-Kakula, Teck's QB2, Oyu Tolgoi's underground expansion, Cobre Panama and Grasberg — will deliver enough incremental supply to erase the deficit before the decade's end. Even with those projects in the model, the bank said supply risk remains skewed to the downside, citing persistent grade decline and resource depletion as structural constraints.
The bank maintains Buy ratings on Freeport-McMoRan, Anglo American, Glencore, First Quantum, Teck Resources and Lundin Mining, with price targets above current market levels.
This article is for informational purposes only and does not constitute investment advice.
