LONDON – Copper is underperforming every other major base metal so far this year. The London Metal Exchange (LME) three-month price is this morning trading around $4,840 per tonne, translating to a year-to-date gain of just under five percent.
And there are plenty of analysts expecting even lower copper prices over the coming months. Investors are shunning copper, preferring hotter metallic markets such as zinc, currently showing a year-to-date gain of almost 47 percent.
But then zinc has an enticing bull narrative of a pending supply crunch, while copper is struggling to absorb a wave of new mine production, much of it coming from projects that were planned years ago when the price was double current levels and the market was characterized by structural supply deficit.
Famine has turned to feast in the intervening years, extra supply hitting the market just when demand, particularly Chinese demand, is stuttering. Yet another commodities text-book case of bad timing to file alongside iron ore and nickel.
But what’s unusual about this particular copper production surge is where’s it’s coming from. It’s coming from South America, but not Chile, the country most synonymous with copper production, but rather its northern neighbor, Peru.
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