Chile’s biggest copper mine is increasing its premium for European customers from $230 to $325 per ton. This change is due to a supply shortage caused by a 10% drop in production compared to last year. In August, production fell by 25% because of disruptions at the El Teniente mine. The El Teniente mine experienced a production halt after an accident, impacting overall supply. Authorities say that the investigation will take several months, leading to uncertainty about when full operations will resume. This uncertainty could influence copper prices in the near future. These challenges highlight concerns about copper supply, which may prevent prices from dropping significantly. This information is designed for those interested in commodity markets and reflects the current difficulties in the copper supply chain. Chile’s top copper producer is raising its premium for physical copper to $325 per ton for European clients. This marks a significant increase from the approximately $230 seen in recent years, driven by tight supply and ongoing production issues. The stoppage at the El Teniente mine is making an already restricted market even tighter, with the company’s output down 10% this year. This situation is mirrored in global inventories, which are at historic lows as of late 2023. Recent data from the London Metal Exchange (LME) shows warehouse stocks at just 65,000 tonnes, a critically low amount. This issue isn’t confined to Chile. We also see sporadic labor and community issues in Peru in 2025. These combined supply challenges are creating a strong support level for copper prices, limiting how low they can go even if broader economic data weakens. On the demand side, the outlook remains strong, which could further amplify the impact of these supply cuts. China’s latest Caixin Manufacturing PMI came in at a surprising 51.2, indicating growth and a continued need for industrial metals. The global push for electrification and upgrades to power grids is a major long-term driver for copper consumption. For traders in derivatives, this situation suggests buying long-dated call options to capture potential gains while minimizing risk. With the uncertainty in supply, we expect implied volatility to increase, making it wise to establish positions sooner rather than later. Additionally, selling out-of-the-money puts or using bull put spreads could be effective strategies to collect premium from the anticipated price stability.

here to set up a live account on VT Markets now