The recent decline in copper prices could lead to a tightening market

Copper is widely used in the power and construction industries, so it is often seen by investors as a barometer
of economic conditions.
The London Metal Exchange (LME) benchmark copper price was trading at $5,850 a tonne on Thursday, down nearly 9 percent
so far this month.

The fall in copper prices is largely based on a potential decline
in demand in China.
It is estimated that China will consume about 24 million tons of copper this year, accounting for nearly half
of the global total.

However, supply disruptions in Chile, the world's leading copper producer, political and power issues in Zambia, and restrictions on scrap imports in China are expected to weigh on copper supplies in the second half of 2019
.

A metal-focused fund manager said: "The current supply shortage in the copper market has far exceeded expectations two months ago and has begun to manifest itself
in the spot market.
”

The large coal mine in Chuquicamata, owned by Chile's state-owned mining company Codelco, may have to deal with a strike
next.
This week, three unions at the mine rejected a final offer
for a new contract.
Codelco is the world's largest copper producer, producing 1.
678 million tonnes
of copper last year.

Kash Kamal, capital markets analyst at Bank of Montreal, said: "This year we expect a shortfall of about 270,000 tonnes of refined copper, and the tightening of the concentrate market can also be seen in processing fees, which are currently below $60 per tonne for spot processing, compared to $
95 in December last year.
" ”

In addition, the breakdown of salary negotiations at the Las Bambas copper mine in Peru at Minmetals Resources Co.
, Ltd.
("MMG"), a subsidiary of China Minmetals Corporation, has also raised concerns
about the supply of high-quality concentrate.
Las Bambas is one of the largest copper mines in Peru, with an annual production of about 400,000 tons
.

Zambia, which produced 860,000 tonnes of copper last year, could lose 100,000 tonnes of capacity
this year due to mining tax reform.
Moreover, Zambia is facing a power supply crisis
.
Analysts expect Zambia to lose a cumulative 1.
2 million tonnes of copper production this year.

In terms of stocks, the total stock of copper in the LME-approved warehouses is currently 212,450 tons, and the warehouse copper stocks monitored by the Shanghai Futures Exchange are 172,266 tons
.
China's restrictions on scrap imports are also expected to exacerbate supply shortages
in the coming months.

"Even if demand in China is weaker, China will have to import more concentrates and refined metals
due to scrap metal import regulations," the fund manager said.
”