Copper slips from near-record highs as Chilean output hits 2011 low

Copper prices slipped in New York on Tuesday, surrendering recent gains as a stronger dollar and global bond selloff capped a rally. December Comex copper fell 1.3 per cent to $6.6020 a pound, or roughly $14,555 a tonne, after briefly touching $6.7420 earlier in the session. Despite the pullback, the contract remains up about 15 per cent in 2026 and 44 per cent over the past year.

The price action underscores a tightening physical market driven by severe weather disruptions in Chile, the world’s top producer. July output fell 9.4 per cent year-on-year to 403,424 tonnes, marking the weakest July performance since 2011. The national statistics agency attributed the decline to adverse weather in the northern mining regions and ongoing maintenance at major sites.

This production shortfall has rippled through the broader Chilean economy. The Imacec activity index, a proxy for gross domestic product, contracted 1.5 per cent in July against expectations for 0.4 per cent growth. The central bank noted that weather conditions significantly disrupted the normal operation of production facilities, dragging the mining sector down 9.3 per cent.

Major miners have already begun adjusting their forecasts in response to the damage. Intensifying El Niño storms forced the closure of Antofagasta’s Los Pelambres and Lundin Mining’s Caserones operations. Antofagasta recently cut its 2026 production guidance to a range of 625,000 to 655,000 tonnes, while Lundin trimmed Caserones expectations to 120,000 to 130,000 tonnes after a storm destroyed a transmission tower.

Tariff-driven stockpiling

Supply constraints are colliding with aggressive front-running of US trade policy. Traders have spent the year shipping refined copper into the United States ahead of a 15 per cent import duty scheduled for January 2027, which will rise to 30 per cent in 2028. Consequently, Comex stockpiles swelled to approximately 688,000 tonnes by August 31, nearly triple the total held in London Metal Exchange warehouses.

This dynamic is rapidly altering the global supply-demand balance. While research firm CRU initially projected a 639,000-tonne global surplus for 2026, it now views the market as merely balanced. Principal copper analyst Robert Edwards warned that if import volumes persist at current rates, the market will effectively transition into a deficit.

Market reactions

Equity markets reflected the mixed signals, with copper producers broadly retreating on Tuesday despite strong monthly gains. Freeport-McMoRan fell 2.6 per cent to $73.76, though it remains the top monthly performer among major miners with a 17.8 per cent gain. Antofagasta and Lundin Mining lagged the sector, dropping 5.1 per cent and 3.8 per cent respectively on Tuesday, capping modest monthly advances.

Broader corporate activity continues to shape the sector’s landscape. Anglo American aims to close a $53 billion merger with Teck Resources as early as next month, pending Chinese approval. However, Glencore’s 44 per cent stake in Collahuasi remains a hurdle to the $1.4 billion in annual earnings Anglo expects to unlock by linking that mine to Teck’s Quebrada Blanca.