Oyu Tolgoi mine. Image courtesy of Turquoise Hill Resources
The short-term outlook for copper is “pretty healthy,” with global stockpiles trending down and mine disruptions having eroded supply from Latin America, Rio Tinto’s head of copper Bold Baatar said on Tuesday.
“We’re seeing pretty good fundamentals,” he told Reuters after the opening of the underground phase of the Oyu Tolgoi copper mine in Mongolia, which is set to be the world’s fourth-largest copper mine when it is fully operational.
“Physical stocks of inventories of copper are at multi-year lows,” he said, adding that copper demand in China was “relatively strong.”
Global copper inventories held in warehouses monitored by the London Metal Exchange (LME) hit the lowest in 17 years last month as the global economy gathers steam post-covid 19, while Shanghai Futures Exchange stocks have turned down in recent weeks on seasonal demand pickup and as prices fell.
Benchmark copper on the LME traded down 0.6% at $8,876 a tonne on Tuesday, on a firm dollar, worries about the knock-on impact of a US banking crisis and as Chinese demand has not picked up as quickly as some had previously hoped.
[Click here for an interactive chart of copper prices]
But the contract has gained more than 5% year-to-date, and around a quarter from mid-July when it hit its weakest since late 2020.
“Overall, actually, there’s significant copper shortages in terms of the supply deficit that’s coming out of Latin America and the disruptions that are happening in countries like Peru.
“So at the moment, even in the short-term outlook, there’s a pretty healthy demand picture,” Baatar said.
Copper mines in Peru and Chile have been disrupted by protests that have blocked roads, impacting mine supplies getting in and concentrate shipments getting out.
Key copper mines in Peru, however, are cranking up activity again, power data analyzed by Reuters showed, potentially boosting supply from the world’s no. 2 producer.
(By B. Rentsendorj and Mai Nguyen; Editing by Sharon Singleton)
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