Copper Supply Tightens on Cuts at Chile, Kamoa-Kakula

Key Moments

Chile’s February copper production dropped to 378,554 tonnes, the lowest monthly level in almost nine years, with output down 8.5% m/m and 4.8% y/y.
Ivanhoe reduced production guidance for the Kamoa‑Kakula mine for 2026 to 290-330kt and for 2027 to 380-420kt, citing a more conservative mining plan.
LME positioning showed rising net longs in aluminium to 82,987 lots, while net long positions in copper and zinc declined.

Supply Pressures Emerge Despite Softer Investor Positioning

ING analysts Ewa Manthey and Warren Patterson report that the copper market is seeing signs of tightening supply, even as speculative activity on the London Metal Exchange (LME) turns less bullish for some base metals. The analysts point to weaker copper output in Chile alongside revised guidance from Ivanhoe at Kamoa‑Kakula, as well as shifting speculative positioning across copper, zinc, and aluminium.

Chile Copper Production Falls to Multi‑Year Low

According to the analysts, Chile has recorded its lowest monthly copper production in almost nine years, highlighting ongoing structural challenges for the country’s mining sector. Data from INE show that February copper output came in at 378,554 tonnes, representing an 8.5% month-on-month decline and a 4.8% year-on-year drop.

They note that lower ore grades and weaker performance at major operations weighed on overall production. The previous time Chilean copper output was at a similar level was in March 2017, when strikes disrupted operations at BHP’s Escondida mine.

The analysts add that “Chile, which accounts for around a quarter of global mine supply, has now seen output decline on an annual basis for seven consecutive months.”

Region / Source	Metric	Latest Figure	Change / Comment
Chile	February copper output	378,554 tonnes	Down 8.5% m/m and 4.8% y/y; lowest in almost nine years
Ivanhoe – Kamoa‑Kakula	2026 production guidance	290-330kt	Lowered from 380-420kt
Ivanhoe – Kamoa‑Kakula	2027 production guidance	380-420kt	Cut from 500-540kt
LME Speculators	Aluminium net long	82,987 lots	Up by 1,285 lots in week ending 27 March
LME Speculators	Copper net long	38,729 lots	Down by 2,302 lots
LME Speculators	Zinc net long	40,171 lots	Down by 4,393 lots

Kamoa‑Kakula Guidance Cut After Operational Challenges

In addition to Chile’s weaker numbers, Manthey and Patterson point to fresh adjustments at one of the world’s key growth projects. “Elsewhere, Ivanhoe trimmed production guidance for the Kamoa‑Kakula mine, lowering its 2026 outlook to 290-330kt from 380-420kt and cutting its 2027 forecast to 380-420kt from 500-540kt, as it adopts a more conservative mining plan following last year’s flooding.”

These revisions add another layer of constraint to the forward supply outlook, reinforcing the tightening narrative highlighted by the analysts.

Speculative Flows Diverge Across Base Metals

On the positioning side, the latest Commitments of Traders Report (COTR) from the LME shows a mixed picture across the base metals complex.

“According to the latest LME COTR report, speculators increased net long positions in aluminium by 1,285 lots in the week ending 27 March, snapping six consecutive weeks of declines and lifting total net bullish bets to 82,987 lots.”

Copper and zinc, however, saw reduced speculative interest. “In contrast, net longs in copper fell by 2,302 lots to 38,729, while zinc net longs declined by 4,393 lots to 40,171 after two weeks of gains.”

Balancing Supply Risks and Market Sentiment

Taken together, the analysts highlight that tightening conditions on the supply side – driven by Chile’s sustained production weakness and Ivanhoe’s guidance cuts at Kamoa‑Kakula – are emerging against a backdrop of more cautious speculative positioning in copper and zinc, even as aluminium benefits from renewed bullish flows linked to tight global supply.