Copper Supply Likely to Tighten amid Production Suspension in Latin America and Africa

On February 3, the production disruptions in major copper producing regions in Latin America and Africa led to higher possibility of a tighter supply, but analysts said it was too early to lower global supply forecasts.

Amid the expectations of tight supply and the increasing demand from China, copper prices rose to $9,550.5/mt.

Peru, the second largest copper producer in the world witnessed intensive social unrest since December. In Panama, First Quantum Mine is in a dispute with the government over taxation.

According to the US Geological Survey, Peru produced 22 million mt of copper mines last year, accounting for about 10 percent of global copper ore supply. 

With new projects such as Anglo American's Quellaveco in Peru, the supply of copper ore is expected to rise by more than 5 percent to 23-26 million mt, leaving the market with a slight oversupply.

"The social unrest in Peru is clearly a concern, but so far the production disruptions have not been that severe," said Macquarie analyst Alice Fox.

"Logistics are impacting the shipment of copper concentrate, and the government is working to address these issues."