Will there be an oversupply of copper? Chile, the world's largest copper producer, issued an early warning.

Chile, the world's largest copper producer, cut its average copper price forecast for this year and next on Tuesday in anticipation of a slowdown in the world's major economies and the phasing out of stimulus measures around the world, warning of a possible oversupply. However, investment institutions such as Jeffery are against it.

Cochilco, the Chilean government's copper committee, said in its quarterly report on Tuesday that it had lowered its forecast for copper prices this year to $4.20 (about $9259.3 a tonne) from a previous average of $4.30 a pound. The average copper price is expected to be $3.95 next year as the global market changes from undersupply to oversupply, the report said.

Copper prices surged to record highs in May as supply struggled to keep up with recovering demand in the global economy, but have since fallen back. LME copper futures traded around $9485 a tonne in Asian trading on Wednesday.

As copper is widely used in industry, it is often regarded as an "economic weather vane". The Federal Reserve released its economic beige book last week pointing to a slowdown in U.S. economic growth in the third quarter, and traders expect the Fed to start withdrawing stimulus measures this year. All these are not conducive to copper prices to continue to rise.

Cochilco expects global copper demand to grow 2.4 per cent this year and 3 per cent next year, while copper supply is expected to grow 1.2 per cent this year and 4.5 per cent next year. As a result, the agency expects the copper market to shift from a shortage this year to a surplus next year.

In addition, the labor dispute between copper giant BHP Billiton in Chile has also come to an end, which means that supply will increase.

It is reported that BHP Billiton recently said that workers at its Ceroo Caserones copper mine in Chile had voted and accepted the latest salary package agreed by the negotiation team during the mediation negotiations, which also meant that the company's copper mine would end a more than three-week shutdown, allowing its Chilean copper mine business to resume.

The organization holds an opposing point of view.

However, there are investors who take a different view. Christopher Rafemina (Christopher LaFemina), an analyst at Jefferies (Jefferies), an investment bank, said global copper supply would continue to be lower than expected and weak supply growth would be good for prices. They also point out that electric vehicles and decarbonization policies have contributed to a sharp increase in demand for copper, thereby maintaining the rising trend of copper prices.

Moody's also believes that copper prices will remain high by the end of 2022.

The outlook for the global metals and mining industry has shifted from "positive" to "stable", according to Moody's latest report, and while most metal prices are above historical levels, that does not mean they will weaken significantly from current levels.

Moody's believes that global industrial activity remains strong, with manufacturing purchasing managers' indices exceeding 60 in the US and Europe and about 50 in China.

Compared with the historical average, copper prices are expected to remain strong at least at the end of 2022, while structural deficits will keep prices high in the long run, Moody's said. The carbon transformation efforts of the government and industry ultimately benefit copper production.