Peru's Production Expectations: Global Supply Demand Imbalance and Chilean Miners' Profits

Peru copper production outlook

The latest forecast from the SNMPE shows that despite the challenges, mining companies in Peru are still on track to extract up to 2.7 million to 2.8 million tons of copper in 2024, although this figure is slightly below the 3 million tons target set by the government. Victor Gobitz, head of the association and a senior executive at Antamina Copper, Peru's second largest copper producer, raised this expectation at a recent industry forum. It is worth noting that Peru produced 1.29 million tonnes of copper in the first half of the year, down from the same period last year, reflecting the complex environment facing the global copper industry.

The imbalance between supply and demand in the global copper market has worsened

At the same time, the latest report of the International Copper Study Group (ICSG) reveals the supply-demand imbalance in the global copper market. In June 2024, the global refined copper market experienced a supply surplus of 95,000 tons, which was further expanded from 63,000 tons in May. In the first six months of this year, the cumulative oversupply in the market has reached 488,000 tons, much higher than the 115,000 tons in the same period last year. This shows that while copper plays a key role in the green energy transition, current market demand is not adequately absorbing rapidly growing production.

Antofagasta, the Chilean miner, saw earnings rise

Chilean mining giant Antofagasta has shown strong profitability against the backdrop of fluctuating copper prices and changing market demand. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 5 per cent from a year earlier to $1.39bn, helped by higher copper prices, the company reported in its half-yearly results. In addition, the company also announced the early completion of the second concentrator at the Centinela mine and the start of the expansion of the desalination plant at Los Pelambres, which are expected to further increase its capacity and competitiveness. However, Antofagasta is also facing the challenge of declining ore tastes and expects full-year copper production to be at the lower end of the guidance range.

Future outlook of copper industry

Looking to the future, copper as a core material in the field of green energy transformation and emerging technologies, its demand prospects are still broad. Especially with the booming electric vehicle industry and emerging applications such as artificial intelligence and data centers, the demand for copper is expected to continue to grow. However, how to balance supply and demand, cope with price fluctuations and improve resource utilization efficiency will be the common challenges faced by copper enterprises. At the same time, Peru, Chile and other copper-rich countries also need to promote the sustainable development of the copper industry through policy adjustments and market mechanism innovation.