Chile’s copper commission has cut its production forecasts for the world’s largest producer and raised its 2027 price outlook by 17% as mines struggle to recover lost output.
Cochilco raised its average copper price forecast for 2027 to $5.95 (C$8.32) per lb. from $5.10 in releases issued Friday. It now expects Chilean output to fall 8.4% in 2026, compared with the 2.6% decline projected in August.
“The [global] surpluses we project are small and can change with operational delays or higher-than-expected consumption,” Executive Vice-President Claudia Rodríguez said in a price announcement Friday.
The projected surplus of refined metal leaves little room for further supply disruptions. Demand just 1% above next year’s forecast would erase the surplus and create a deficit of about 65,000 tonnes if supply stayed unchanged, according to calculations based on Cochilco’s figures.
BMO Capital Markets analysts Helen Amos and George Heppel said the downgrade could leave Chile with its weakest annual copper production in more than two decades.
Chile’s decline
Cochilco also raised its average copper price forecast for 2026 to $6.18 per lb. from $5.95. Despite raising both forecasts, it expects the annual average price to fall 3.7% from $6.18 in 2026 to $5.95 in 2027 as supply recovers. That decline depends on mines meeting their production plans and metal reaching consumers.
Chile is expected to produce 4.94 million tonnes of the red metal this year and 5.08 million tonnes next year, down from the agency’s August forecasts of 5.27 million and 5.55 million tonnes, respectively.
The country produced 3.63 million tonnes in this year’s first nine months, down 8.5% from a year earlier. BHP’s (ASX, LSE, NYSE: BHP) Escondida and Spence operations, together with state-owned Codelco, accounted for 77% of the net national decline.
Cochilco points to lower ore grades, maintenance and interruptions affecting both the amount of material processed and the copper recovered. Reaching even the reduced annual forecast requires monthly production of about 434,000 tonnes in the fourth quarter, 7.6% above the average through September.
Cochilco forecasts global mine production will rebound 3.4% next year to 24.08 million tonnes after slipping 0.6% this year. Chile and the Democratic Republic of Congo would supply about 37% of that increase, making their recovery central to Cochilco’s market outlook. Chile would still produce 5.7% less copper than in 2025.
Uneven stocks
Cochilco forecasts a refined-copper surplus of 144,000 tonnes this year, equivalent to 0.5% of consumption, widening to 215,000 tonnes next year, or 0.8%. Higher refining output, supported partly by intermediate stocks and recycled material, can coexist with falling mine production, it pointed out.
The location of available metal adds to the strain. In its separate weekly market report, also released Friday, Cochilco recorded 1.05 million tonnes across the three principal exchanges. The U.S. exchange COMEX held almost 70% of the total, while Shanghai Futures Exchange stocks fell 18% during the week to 44,612 tonnes.
China’s Yangshan import premium reached $205 per tonne, while cash copper on the London Metals Exchange traded $210 per tonne above the three-month contract on Thursday. Those premiums reflect the higher cost of obtaining metal for immediate delivery.
Cochilco cautioned that fewer arrivals, shipping delays and contractual supply restrictions helped draw down Chinese stocks. The decline therefore doesn’t establish a broad acceleration in consumption.
Demand offers less reassurance. The BMO analysts warned that AI investment is one of the few engines of industrial growth while construction and autos remain sluggish. A material slowdown in data-centre spending would leave few alternatives to cushion the impact on demand, they said.
Clarification: This article has been updated to distinguish revisions to Cochilco’s annual price forecasts from the projected price decline between 2026 and 2027.