Copper Mine Supply Set for First Annual Decline Since 2017 as US Stockpile Swells

Global mined copper production fell 1.1% year on year in the first half of 2026 and could decline for the full year, the first such drop in nearly a decade, according to a report this week from Sprott Asset Management. Disruptions at Freeport-McMoRan's Grasberg mine in Indonesia and Ivanhoe Mines' Kamoa-Kakula complex in the Democratic Republic of Congo removed an estimated 600,000 tonnes of expected 2026 production, equal to about 2.5% of annual global mine supply. Copper prices gained 47% in the 12 months through August. Jacob White, director of ETF product management at Sprott, wrote that higher prices improve project economics but cannot compress development stages, noting copper projects take about 17.5 years on average from discovery to production.

Chile, which accounted for about 23% of world mine production last year, remains the biggest weak point, with output down 6.6% in the first half and 9.4% year over year in July. State copper commission Cochilco cut its 2026 production forecast last month to 5.27 million tonnes, 2.6% below last year, citing exceptionally low first-half output from Codelco, Escondida and Spence. Codelco abandoned its 2026 production target in August following setbacks including a fatal accident at El Teniente, where development of the Andes Norte section could remain suspended for as long as two years. Antofagasta and Lundin Mining both cut 2026 guidance in August, removing a combined 35,000 to 55,000 tonnes, and BHP expects Escondida output to fall to 1.0 to 1.1 million tonnes in fiscal 2027 from 1.26 million as feed grades decline.

Mine tightness has not yet produced a refined deficit. International Copper Study Group data show refined production rose 2.4% in the first half while apparent use gained 2.3%, leaving a preliminary 131,000-tonne surplus, or 98,000 tonnes after adjusting for changes in Chinese bonded stocks. What has changed is location: US cathode imports surged to a record 223,000 tonnes in July against a typical pre-2024 July range of 37,000 to 80,000 tonnes. COMEX inventories rose 712% between February 2025 and August 2026 while inventories in London and Shanghai declined, and the US Commerce Department has recommended duties of 15% from January 2027 and 30% from 2028, subject to a presidential decision.

The tariff-driven arbitrage is now narrowing. One measure puts the gap between US and international prices at $169 a tonne versus $789 at this year's height, and CME says it has added 20 warehouses and nearly 725,000 short tons of copper capacity since the start of 2025, equivalent to about 39% of annual US refined copper consumption. The Port of New Orleans, a key metals gateway and major hub for Comex copper warehouses, is already largely full before around 100,000 tonnes more of African and South American copper due in September and October. Anton Posner, chief executive of logistics provider Mercury Resources, said the congestion is causing delays loading copper and other metals to trucks and railcars, and his firm is sending metal up the Mississippi by barge instead.