Copper Supply Under Threat as Mine Setbacks Pile Up

Copper prices are near record highs, but supply is under threat due to mine setbacks and declining ore quality. The International Copper Study Group's forecast of a 1.6% increase in global mine supply this year may not materialize as major producers Codelco and Freeport-McMoRan Inc. posted double-digit declines in the first half.

The Democratic Republic of Congo has been one of the few bright spots, with copper shipments rising over 4%. However, outside the Congo, the industry is facing structural issues, including a thin pipeline of new projects due to sharp cuts in mining investment following the commodity downturn. Morgan Stanley analyst Amy Gower sees the possibility of an annual decline in mine output.

Weather is also adding to the risks, with recent storms in Chile and forecasts of a strengthening El Niño potentially disrupting mines in Congo, Zambia, and other countries reliant on hydropower.