Chile's copper output falls 0.9% y/y as supply shortfall nears

<p>I infrequently <a href="https://www.forexlive.com/news/the-case-for-copper-20220531/" target="_blank" rel="follow">write </a>about the looming shortage of base metals, including copper. Chile's stats agency is out with data showing production in the country — which itself is the equivalent of OPEC for the copper market — is down 0.9% y/y.</p><p>It's not improving either. On Friday, state copper company Codelco cut its 2023 output forecast to 1.31-1.35 million metric tons from 1.35-1.45 million previously. That's after several production halts and because grades are falling.</p><p>In a related story, the FT this weekend <a href="https://www.ft.com/content/c88c0c6d-c4b2-4c16-9b51-7b8beed88d75" target="_blank" rel="nofollow">outlined </a>a looming supply shortage in electricity cables and converter stations, with orders being pushed out four years or more.</p><p>To be clear, there's no shortage of copper at the moment and some mines are coming online this year and next; but around mid-decade there is a strong case that there will be undersupply. Given that it takes about 10 years to bring a copper mine online, the chances of an upside supply surprise are virtually nil.</p><p>What's missing at the moment for the copper market is Chinese demand but that could change with looming stimulus.</p>

This article was written by Adam Button at www.forexlive.com.