I infrequently write about the looming shortage of base metals, including copper. Chile’s stats agency is out with data showing production in the country — which itself is the equivalent of OPEC for the copper market — is down 0.9% y/y.
It’s not improving either. On Friday, state copper company Codelco cut its 2023 output forecast to 1.31-1.35 million metric tons from 1.35-1.45 million previously. That’s after several production halts and because grades are falling.
In a related story, the FT this weekend outlined a looming supply shortage in electricity cables and converter stations, with orders being pushed out four years or more.
To be clear, there’s no shortage of copper at the moment and some mines are coming online this year and next; but around mid-decade there is a strong case that there will be undersupply. Given that it takes about 10 years to bring a copper mine online, the chances of an upside supply surprise are virtually nil.
What’s missing at the moment for the copper market is Chinese demand but that could change with looming stimulus.