Deficit and demand strengthen copper from Chile and Peru, despite acid restriction and crisis in the Middle East

The fundamentals of the copper market suggest that Latin American producers such as Chile and Peru could benefit from an upcoming supercycle, despite the current global industry risks.

The scenario includes China’s announced ban on its export of sulfuric acid as of May 1, the conflict in the Middle East and the rapid accumulation of red metal in inventories in the United States and China, the main consumers of regional copper.

Copper is traded today in a fragmented world, marked by hoarding and stockpiling as a preventive supply strategy.

Solid-persistent demand

Although the war in the Middle East has contracted demand and generated high volatility in copper prices, this would be a temporary phenomenon, said Helen Amos, managing director and commodities analyst at BMO Capital Markets, during the Copper Conference CRU 2026 attended by BNamericas in the city of Santiago.

Taking advantage of the low copper prices recorded in the first quarter, the US and China have accumulated reserves in their countries to ensure continuity in the development of power grids, data centers, industrial machinery, transport electrification, and to avoid falling behind in the race for artificial intelligence. 

In this context, supply chains historically considered secure by the United States, such as the flow of copper from Africa and Latin America, "are now perceived as risky due to global fragmentation," Amos added.

The expert predicts copper prices to reach new highs in the short term due to the deficit of concentrates and cathodes.

Limited supply

The global competition for cathodes will lead to a deficit outside the US, especially as China gradually reduces its inventories due to consumption.

“If the current pace continues, in the coming weeks China could record the greatest copper inventory shortage in its history,” warned Nicholas Snowdon, head of metals and mining research at Mercuria Energy Trading.

On the other hand, China is registering a sharp drop in secondary cathode production from scrap due to domestic tax policies, which would encourage, in the short term, greater imports of cathodes to sustain its electrification ambitions, Snowdon said.

Thanks to commercial performance, “the Chinese cathode market will have a significant deficit this year, of between 250,000 and 300,000 tonnes, given that inventories have already fallen below 400,000 tonnes,” explained the Mercuria analyst.

China has shown a stronger-than-expected economy in the first quarter of 2026, with year-on-year GDP growth of 5%. Furthermore, it has maintained robust exports of copper-containing products, such as transformers, AI hardware, and green technologies, despite trade tensions with the United States.

Acid

The export restriction on sulfuric acid by China could affect mining producers such as Chile, while at the same time generating an excess of acid domestic supply in the Asian country.

This would force some Chinese smelters to reduce their operating rates to decrease acid production as a byproduct, which would boost the need to import copper cathodes, pushing prices up.  

In Chile, the reduced availability of Chinese acid would be complex, although it could intensify purchases from other suppliers, optimize its use, and accelerate the national strategy to increase smelting capacity. 

Chile imports acid from Peru, China, and South Korea. “With China out, the pressure on Peru as a supplier will be enormous,” the local Mining Chamber said in a statement.

Copper plays a crucial role in international trade, where it is even being considered the new oil. Governments and mining producers in the region must adapt quickly to the changes and make efforts to maintain a steady supply, and take advantage of the start of a new period, experts said at the congress.

(The original version of this content was written in Spanish)