The price of copper in New York closed at its lowest level in more than three months on Friday after one of the largest producers of the metal predicted weaker prices for at least the next two years.
On the Comex market in New York July futures settled at $2.0555 a pound (around $4,500 a tonne), the lowest since February 12.
After a brutal couple of weeks of trading copper is down 10% in May, wiping out year-to-date gains entirely. Last year copper fell 26% in value.
The FT quotes Iv??n Arriagada, who took the helm at Chile's Antofagasta last month, as saying the market is likely to be in oversupply of roughly 300,000 tonnes this year and in 2017.
What we're trying to understand is how much of that is restocking, how much is temporary [and] how much is sustainableArriagada blames Chinese demand which constitutes nearly half of global demand slowing to just over 2% over this period:
"We had a very good first quarter, we were surprised by the strength of the physical imports into China," Mr Arriagada said. "What we're trying to understand is how much of that is restocking, how much is temporary [and] how much is sustainable."
Antofagasta this year is targeting production of more than 700,000 tonnes of copper on a non-attributable basis. The company's El Tesoro expansion project should add another 50,000 tonnes capacity by the end of this year, while longer term its Esperanza and Los Pelambres projects should move it higher up in the rankings.
Antofagasta last year also bought a 50% stake in the Zaldivar mine from Barrick Gold. Zaldivar is expected to produce around 100,000 tonnes of copper this year.
A new research report by FocusEconomics compiling views on the copper market of global analysts and economists paints a much brighter picture.
According to the report which covers analysis by 22 investment banks and research houses including the likes of Deutsche Bank, JP Morgan, Macquarie, Oxford Economics and others, the copper price is set to rise steadily (albeit modestly) towards the end of the year and throughout 2017.
Analysts forecast that prices will average $4,972 per tonne ($2.25/pound) in the final quarter of 2016. They expect prices to increase further and average $5,373 per tonne ($2.44/pound) in Q4 of 2017. Of the 22 surveyed 15 kept forecasts for the rest of the year steady, 5 upped price targets and two lowered.