Breaking News
Get 40% Off 0
🔎 See NVDA's full ProTips for an instant risks or rewards Claim 40% OFF

Dwindling copper supply from Panama and Peru could wipe out global surplus in 2024

Published Nov 28, 2023 12:58 Updated Nov 28, 2023 13:03
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Artisan miners work in an area where other hundreds of artisan miners have found a rich seam of copper in the hills of Tapairihua in Peru's Andes, October 18, 2022. REUTERS/Marco Aquino/File Photo

By Polina Devitt

LONDON (Reuters) - Reduced supply from major copper producers Panama and Peru may flip the global copper market into a deficit from surplus in 2024 or at least tighten oversupply if the disruptions are not resolved in coming months, analysts said on Tuesday.

Panama's top court on Tuesday ruled that Canadian miner First Quantum (TSX:FM)'s contract to operate the Cobre Panama mine there is unconstitutional, while a union representing half of the workers at Peru's Las Bambas mine went on strike.

If the Cobre Panama mine were to be permanently shut, then the market could easily move into deficit in 2024, said Macquarie analyst Alice Fox.

However, if it is out of operation only until Panama's May 2024 presidential election, it would mean a loss of around 40,000 tons of copper this year and 160,000 tons next year, according to her estimate.

"This could result in a small deficit this year but the market should be able to absorb the loss next year and remain in surplus, albeit a smaller one. This could provide some support to prices next year," she added.

Benchmark copper on the London Metal Exchange rose 1.4% to $8,480 a metric ton by 1721 GMT. [MET/L] Reuters' November poll of analysts forecast an oversupply at 302,500 tons of copper in 2024.

Bank of America (NYSE:BAC)'s 2024 base-case scenario sees the global copper market surplus at 150,000 metric tons, said analyst Michael Widmer. That includes 370,000 tons from Cobre Panama, 200,000 tons of production increase from Las Bambas and incorporates a 6% disruption allowance.

"So losing any of these tonnages might well take us closer to a deficit," Widmer said.

Copper, used in power and construction, is widely expected to benefit from the green energy transition in coming years, however it is up just 1.2% so far in 2023 amid patchy post-pandemic recovery of top metals consumer China and concerns about economic growth elsewhere.

"Participation in the copper market has been slim. This could be the trigger for some longer-term investors to come in, especially given the deficit calls for the back half of this decade are now being brought forward," said Al Munro at broker Marex.

Dwindling copper supply from Panama and Peru could wipe out global surplus in 2024
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email