Copper prices retreated in after-hours trading on July 16, caught in a broad metals selloff triggered by a fresh flare-up in US-Iran tensions, even as a powerful storm bearing down on Chile's copper-producing heartland kept supply risks alive and cushioned the metal's decline. The September COMEX contract had ended the regular session nearly flat at US$6.342 per pound (US$13,980 per metric tonne), hovering near a three-week peak, before easing 1.1% to US$6.27 once evening trading opened in New York. The benchmark contract now trades approximately 6% below the all-time record above US$6.60 set in early June.
On the London Metal Exchange, three-month copper wrapped up the midweek session at US$13,585 per metric tonne, leaving LME cash prices nearly 8% higher year-to-date. The evening selloff was ignited after Washington struck an oil tanker near Iran's main export hub in the first such strike since the blockade resumed, sending the dollar and bond yields higher and reigniting speculation that the Federal Reserve may need to tighten monetary policy to contain oil-fueled inflation. Gold tumbled 2.1% to below US$4,000 per ounce, silver fell nearly 4%, and the S&P 500 gave back 0.5%.
Copper equities bore the brunt of the shock: Freeport-McMoRan fell 4%, Ivanhoe Mines dropped 4.9%, Antofagasta shed 4.1% following a soft output report, and Southern Copper, the flagship copper arm of Mexico's Grupo México, lost 3.2%. Analysts have cautioned that a prolonged Gulf conflict could weigh heavily on miners' earnings. According to estimates cited by Mexico Business News, Southern Copper's earnings could slide roughly 20% if sustained Strait of Hormuz disruptions push copper below US$10,000 per metric tonne.
Copper's relative resilience compared to gold and silver owed much to ongoing supply concerns centered on Chile, where a winter system classified as a potential Category 5 atmospheric river rolled in on July 16, cutting power and battering homes across the south. The storm was anticipated to strike the central copper belt with up to 150 millimetres of rainfall. Interior Undersecretary Máximo Pavez warned that fierce winds would slow power restoration, stating: "We are going to have power outages." Beyond the immediate weather and geopolitical disruptions, the market's structural underpinnings remain tight.
The International Energy Agency (IEA) has warned that sulphuric acid shortages have "considerably worsened" copper's near-term supply outlook. Sulphuric acid is the key input behind more than 15% of global primary copper produced through leaching and electrowinning. The effective closure of the Strait of Hormuz in February disrupted much of the seaborne sulphur trade, while China's ban on acid exports through year-end has deepened the squeeze, leaving some producers with as little as 30 to 60 days of inventory, according to the IEA.
Over the longer term, the IEA projects primary copper supply falling about 25% short of requirements by 2035, a narrower gap than last year's estimate but one that will demand roughly US$310 billion of the more than US$750 billion in total mining and refining investment the agency sees as necessary through 2040. On the demand side, refined copper consumption neared 28 million tonnes in 2025 and is projected to grow more than a quarter by 2040, driven by power grids, electric vehicles, and data centers. Pressure is also mounting in the midstream: a glut of Chinese smelter capacity has driven the annual treatment-charge benchmark to zero for 2026, its lowest level on record.
Chile itself signalled growing caution on July 15, trimming its 2026 growth forecast to 1.8% amid Middle East uncertainty, while simultaneously raising its copper price assumption to US$5.90 per pound from US$5.46. The revision reflects a broader pattern of upgraded price forecasts, though Goldman Sachs has maintained that copper remains exposed to further downside as long as Hormuz flows stay disrupted, according to Mexico Business News. For Mexico, the market turbulence carries direct consequences.
Grupo México has benefited from elevated copper prices, with the group's quarterly earnings surging alongside a sharp metals rally. The company's diversified by-product mix, including silver, zinc, and molybdenum, provides some cushion when copper weakens. Nevertheless, the group's Southern Copper unit is pressing ahead with a US$10.2 billion investment pipeline focused on Mexican projects, including El Arco in Baja California and El Pilar in Sonora.
These long-dated commitments reflect a conviction that structural supply shortfalls will continue to reward new production capacity, regardless of near-term price volatility. Source: Mexico Business News, International Energy Agency, mining.com
Source: mexicobusiness.news