BHP’s Escondida restart eases tight copper market

BHP’s (ASX: BHP) Escondida in Chile, the world’s largest copper mine, is gradually resuming operations after a fatal accident halted activity just as tight inventories and strong demand keep the copper market under pressure.

Escondida’s interruption came the same day COMEX copper reached a record $6.83 per pound before easing to $6.76 per pound. Friday morning. Escondida mine president Alejandro Tapia confirmed the fatality Thursday.

“The company continues to assess the conditions for a gradual resumption of Mine activities, taking into account workforce wellbeing, operational readiness, risk controls and applicable authority requirements,” BHP said in an emailed statement.

The timing puts renewed focus on a copper market with little apparent supply cushion. Chinese inventories are near a cyclical low as the country heads into consecutive holidays that will temporarily interrupt restocking, while global refined consumption has been running ahead of supply.

Supply squeeze

Shanghai Futures Exchange copper stockpiles stand at about 47,000 tonnes, according to BMO Metals, near a cyclical low ahead of China’s Mid-Autumn Festival from Sept. 25 to 27 and National Day Golden Week from Oct. 1 to 7.

Those holidays are expected to pause restocking by Chinese consumers, creating a temporary lull in physical demand. Yet BMO said recent copper price declines have remained “shallow and short-lived” because fabricators cannot defer purchases for long.

The underlying supply picture is also tight. Data released by the International Copper Study Group show global mine production was running at an annualized 23 million tonnes in July, down 4% from June. Refined demand rose 3% from a year earlier to an annualized 29 million tonnes, while refined supply slipped 1% to 28.4 million tonnes.

That gap implies refined consumption exceeded supply during the month, helping explain copper’s resilience even as Chinese buying enters a seasonal pause.

Escondida matters disproportionately to that balance. BHP produced about 2 million tonnes of copper across its portfolio in its latest financial year, and copper generated more than half of the miner’s underlying EBITDA for the first time. The company is also planning a new concentrator at Escondida as part of a pipeline that could lift group copper output by about 40% by fiscal 2035.