Unforeseen events such as strikes are curbing copper production, said the London-based Sucdens head of industrial commodities Jeremy Goldwyn. A decline in inventories and a history of underinvestment in the mining industry are also hampering supply, he added.
Short-term supply seems unlikely to improve, Goldwyn said in an e-mailed report on Wednesday.
Sucden forecasts that copper may surpass the record $8,800 a metric tonne traded in May. A shortfall in mine output has also pushed prices for zinc and nickel to records this year, attracting buying from investors such as pension funds.
Copper for delivery in three months on the LME was unchanged at $7,400 a tonne as of 12:04pm local time. The metal, used to make power cables, has gained 68% this year. Nickel has doubled while zinc has advanced 76% Supply problems may outweigh the impact of higher US interest rates on metals demand, Goldwyn added.
Consensus does seem to be growing that the interest rate cycle there has peaked, he said. Higher prices have led to demand destruction as consumers use other materials, he added. A strike at Chiles Escondida, is in its fourth week.
A quick settlement, as expected by most, including ourselves, has not been forthcoming, Goldwyn said.