Chile, the top global copper supplier, recorded its lowest monthly copper output in almost nine years in February 2026. Production totaled 378,554 metric tons, marking an 8.5% decrease from January and a 4.8% drop compared to the previous year. This production level was the lowest since March 2017, when a strike significantly impacted operations at BHP Group's Escondida mine, highlighting persistent challenges faced by the country's mining sector.
This decline in output reinforces concerns about tightening global copper supplies. Chile had already lowered its production forecasts for 2026, anticipating a 2.5% drop due to aging mines and water scarcity. These production shortfalls are occurring despite new projects like Quebrada Blanca Phase 2 and Centinela, which are not sufficient to meet rising demand.
The global copper market is already experiencing significant tightness, with inventories on the London Metal Exchange (LME) and Shanghai Futures Exchange below their five-year averages. Copper prices surged to an all-time high of $6.70 per pound, or $13,643 per metric ton, on June 2, 2026, and continued to trade around $13,750 on the LME. Analysts believe it's not out of the question for copper to hit another record high this year, especially given speculative net long positions across major exchanges.
Factors contributing to the supply squeeze include uncertainty over potential U.S. Section 232 tariffs and China's crackdown on scrap copper availability. While recent winter storms in Chile were deemed to have a "temporary and limited" impact, any prolonged weather-related outages or further setbacks to mine supply could intensify upward pressure on prices. This would subsequently increase the cost of essential products like AI data centers, smartphones, electric vehicles, household appliances, and industrial machinery, all heavily reliant on copper.
Codelco, the world's largest copper producer, has also faced operational challenges, with its Q2 2026 production falling 4% short of targets. This underperformance is primarily due to declining ore grades at its Chuquicamata and El Teniente mines and slower-than-anticipated ramp-ups of new underground block-caving operations. These issues compound the global concentrate supply problem, which has driven spot treatment charges to negative levels and forced some Chinese smelters to reduce their output by 10-15% in Q2.
