Monsters of Rock: Chile's copper positivity has market on a high

Chile expects US$4.25/lb copper prices in 2025 and 2026
Nickel and zinc lift with base metals overnight
Anglo results show copper, diamond, PGM production cuts

Large cap news is slim as CFOs hunker down on their half and full-year financials.

But the world keeps turning, and base metals are the commodities making a move after days that saw the market’s watchful eyes trained on gold.

While gold stumbled marginally from record highs after surging as buyers try to lock in ounces ahead of whatever market distorting policies Donald Trump could roll out, base metals copper, nickel and zinc caught a bid.

Cochilco, Chile’s copper commission, delivered at least part of the steam behind the optimism.

Its latest forecast for 2025 and 2026 projects prices, based on market demand and supply of US$4.25/lb.

Equivalent to US$9350/t, that’s above current LME three month prices, which rose 0.4% to US$9277/t.

Cochilco expects copper demand to lift 3.2% to 27.4Mt this year – a 3.2% lift. At the same time supply will rise 2.3% to 27.3Mt, generating a deficit of 118,000t.

Higher supply in 2026 – up 4.1% to 28.5Mt – would see a shift to a surplus of 210,000t, with demand up 2.9% to 28.29Mt.

But Cochilco acting executive vice president Claudia Rodriguez said in a statement the country sees copper demand lifting due to energy transition demand, electrical networks and restricted supply.

Chile’s mines are projects to grow output 4.6% to 5.76Mt in 2024 and 3.6% to 5.97Mt in 2026.

However, it’s worth noting the South American country, the world’s largest producer of the red metal, has been a persistent disappointment in recent years and last month rejigged its long term supply forecast for 2034 from 6.43Mt to 5.54Mt, a cut of around 900,000t – close to the size of the world’s largest mine Escondida.

Rodriguez said she expects a stronger global economy this year to provide upwards momentum for copper prices, which briefly hit all time highs during a short-lived US supply squeeze in May last year before reverting to end the year close to neutral.

The wildcards will be US tariffs and China’s domestic economic recovery, both of which could hurt demand for the metal, indelibly connected with the broader macroeconomic picture.

ANZ research analysts said copper buying had also been spurred in the short term by concerns over potential tariff’s on Canadian exports – America’s second largest supplier of refined copper after Chile.

“The prices on the Comex in the US rose higher as Trump has renewed threats of specific tariffs on the metal to help support the local industry,” they said in a note this morning.

READ: High Voltage: How will copper shape up under Trump’s tariffs?

Nickel: Bull or bear?

Are traders getting more optimistic on nickel?

The down and out battery metal was crunched two years ago amid the realisation the growth in output from Indonesia would flood the market, creating a single player with OPEC levels of influence on what is a comparatively small but important market.

Cuts to mine supply this year, engineered through the Southeast Asian nation’s RKAB permit system, could help support prices, which pottered around at the bottom of the market for most of 2024.

A brief lift in January gave way to a near 1% drop for the month.

Fastmarkets’ Andy Farida said bullish signals are emerging for nickel’s charts on a medium term.

But in an article last week he said the price reporting agency remained ‘cautiously bearish’ on a technical analysis.

“Despite the overwhelmingly bearish sentiment toward LME nickel, we are only cautiously bearish and envisage that the oversold technical configuration will soon give way to a short-covering rally in the coming weeks,” he said.

“But any rebound is likely to be limited and fresh selling could resume.

“If the bullish price structure (shown by the green arrow in the chart) plays out, we envisage the LME nickel price will then have another tilt at $20,000 per tonne in the first half of 2025. But the price may then give in to fresh selling pressure, which could drag it toward the long-term UTL at around $11,500 per tonne.”

Prices lifted 1.8% overnight on the LME to US$15,811/t, while zinc shifted 1.4% higher to US$2811/t. Where it goes is up in the air.

Anglo results

Is BHP positioned to take another tilt at Anglo American?

At the very least its calls for the company’s platinum group metals assets and diamonds to be hived off or reviewed look to be supported by Anglo’s latest production results, where the segments took production hits in the fourth quarter.

Anglo is doing just that as part of its alternative to BHP’s failed takeover last year, having already announced the sale of its coal assets in Queensland.

Its key copper division, the prize BHP is really after if it returns with a fresh bid, saw production fall 14% YoY but lift 9% QoQ to 198,000t, with full year output coming in at 773,000t for 2024, down 6% from 826,000t in 2023.

BHP’s ultimately failed pitch to Anglo investors was that it would be a better operator of its London-listed rival’s key assets, which include stakes in the Tier-1 Quellaveco and Collahuasi mines in South America.

Anglo expects to produce 690,000-750,000t of copper in 2025, rising to 760,000-820,000t in 2026 and 2027.

Minas-Rio, Anglo’s high grade iron ore ops in Brazil, produced a record 25Mt in 2024, with iron ore output including the South African domiciled Kumba up 1% to 60.8Mt for the year. Kumba would have been demerged under BHP’s plan, which drew the ire of South Africa’s public investment fund, an 8% owner of Anglo.

Anglo expects to produce 57-61Mt of iron ore in 2025, but cut guidance for 2026 from 58-62Mt to 54-58Mt, lifting in 2027 to 59-63Mt. Its diamond guidance copped the biggest whack, falling from 30-33 million carats for this year to 20-23Mct, and 32-35Mct for 2026 to 26-29Mct.

A 26% production cut YoY in the December quarter for the De Beers diamond business to 5.8Mct reflected production cuts to stem losses in the struggling diamond market.

Steelmaking coal production fell 49% YoY to 2.4Mt in December due to the ongoing shutdown at the Grosvenor mine, where a fire halted production last June, while the sale of its stake in the Jellinbah mine meant Anglo received no benefits there from November 1.

The ASX 300 Metals and Mining index rose 3.15% over the past week.

Which ASX 300 Resources stocks have impressed and depressed?

Making gains 🚀

Predictive Discovery (ASX:PDI) (gold) +40%

WA1 Resources (ASX:WA1) (niobium) +26.5%

Vault Minerals (ASX:VAU) (gold) +13.7%

Syrah Resources (ASX:SYR) (graphite) +11.4%

Eating losses 😭

Resolute Mining (ASX:RSG) (gold) -13%

Vulcan Energy Resources (ASX:VUL) (lithium) -10.5%

Liontown Resources (ASX:LTR) (lithium) -4.4%

Pilbara Minerals (ASX:PLS) (lithium) -3.7%

Predictive Discovery charged higher after a $69m investment from Lundin and Zijin that put the Guinean gold explorer in the M&A crosshairs of more large miners.

Resolute fell as CEO Terry Holohan, infamously arrested and held by Mali’s military regime last year before the company agreed to settle a ‘tax dispute’ for US$160m, resigned following a leave of absence.