Anglo American anticipates 30% drop in copper output

Copper prices showed signs of stability on Wednesday, driven by supply shortages in ore and a weaker US dollar. However, worries about demand from China, the largest consumer of copper, tempered the price gains. The London Metal Exchange reported a 0.5% increase in three-month copper to $9,720 per metric ton, while the Shanghai Futures Exchange witnessed a 0.3% uptick in the most-traded July copper contract to 78,780 yuan ($10,857.37) per ton.

Anglo American's announcement of an anticipated 30% drop in copper output at its Los Bronces mine in Chile next year due to maintenance work on a processing plant has added to the supply constraints. The persistent shortages in mined copper have been a key factor propelling prices upward this year. The elevated prices have, however, led to a reduction in copper consumption in China, exacerbated by recent disappointing economic indicators.

The decline in China's spot demand triggered notable exports, resulting in an increase in LME stockpiles to their highest level since January. Major copper smelters are gearing up to export around 80,000 tons of copper in June, although actual export volumes may fall short due to diminished export margins.

The US dollar, which had softened following lackluster retail sales figures, remained steady on Wednesday. A weaker dollar typically makes dollar-denominated commodities, such as copper, more accessible. In other metal markets, LME aluminum climbed by 0.3% to $2,493.50 per ton, zinc rose by 1.1% to $2,868, and lead saw a 2.1% increase to $2,237.50. Tin inched up by 0.1% to $32,165, while nickel dipped by 0.3% to $17,245 per ton.

Over on the Shanghai Futures Exchange, aluminum advanced by 0.6% to 20,515 yuan per ton, zinc gained 1.4% to 23,790 yuan, and lead held steady at 19,445 yuan. Tin exhibited minimal movement at 267,180 yuan, while nickel declined by 1.3% to 133,920 yuan.

The copper market's current dynamics reflect a delicate balance between supply constraints and demand uncertainties, particularly stemming from China. While supply shortages continue to underpin prices, concerns about weakening demand in the top consumer market have introduced a level of caution among investors. The interplay of these factors, alongside currency fluctuations and broader economic trends, will likely shape the trajectory of copper and other metal prices in the coming weeks.