Copper and silver share factory demand, but their prices have told different stories. In September, copper futures slipped just 1%, while silver fell 9.6%, CME Group reports. Why did copper hold up better?
Part of the answer lies in supply. The world can have spare copper while some buyers still struggle to get it. Metal must reach the right place, in the right form, before it can fill an order.
A Surplus With A Catch
The International Copper Study Group expects a refined copper surplus of 104,000 tonnes this year and 368,000 tonnes in 2027. Yet its October forecast also cut this year’s expected mine growth to 1.3%, from 1.6% in April.
The figures track two stages of supply. Mines yield ore and concentrates. Smelters and refineries turn that raw material into usable metal. Scrap can boost supply, too. Weak mine growth alone does not prove that buyers will face a shortage.
Location adds a further twist. Reuters reported Oct. 14 that U.S. warehouses approved by COMEX held roughly 70% of the world’s visible copper stocks. Fears of future import tariffs had drawn metal into the country, leaving less elsewhere.
That helps explain why a worldwide surplus might offer little comfort to a buyer who needs copper now. A stockpile’s size tells only part of the story. Its location and the terms on which owners will sell also count.
New Supply Takes Time
A fresh spending plan shows how slowly supply can respond. Reuters reported Oct. 22 that Grupo Mexico plans to spend $4 billion to $6 billion over three years on major projects at its U.S. mining subsidiary, Asarco.
The plans include growth at Arizona’s Ray and Silver Bell mines and a hoped-for restart of the Hayden smelter and refinery. Studies are still under way. That is future capacity, rather than metal ready to ship today.
New plants could help ease supply strains over time. Until then, existing mines and plants must serve demand from power grids, building projects and other users.
What Could Change the Picture
Copper has also faced selling pressure. Its stronger September showing does not promise further gains. Weak orders or the release of stored metal could ease tight supply in some regions.
Watch whether stocks rise where buyers need them and the extra price paid for prompt delivery falls. If both happen, the surplus forecast would carry more weight. If local shortages persist, copper’s relative strength would have firmer backing. The flow of usable metal deserves as much attention as the global total.
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byUnited States Gold Bureau