Copper prices are poised for further gains as severe winter storms disrupt mining operations in Chile, adding fresh supply risks to a market already grappling with tightening global inventories and intensifying competition between the United States and China for one of the world's most important industrial metals.

Although the immediate impact on production remains limited, analysts warn that any prolonged disruption in Chile, which accounts for more than one-fifth of global copper output, could significantly tighten an already strained market. Supply has been pressured by expectations of new US tariffs, declining availability of copper scrap in China, and rising demand for refined copper used in electricity grids and artificial intelligence infrastructure.

Storms disrupt production in the world's largest copper producer

Chile has been battered over the past week by heavy snowfall, flash floods, and powerful winds that have claimed 13 lives and disrupted operations at several of the country's largest mining companies, including Anglo American, Antofagasta, Lundin Mining, and state-owned Codelco.

Antofagasta suspended mining and processing activities at its Los Pelambres mine, while Barrick evacuated workers from affected sites because of the severe weather.

Lundin Mining said it could take between two and three weeks to fully restart operations at its Caserones mine in northern Chile's Atacama region after heavy snowfall damaged power lines, forcing the company to halt production on July 18.

Meanwhile, heavy rainfall temporarily disrupted operations at Lundin's Candelaria mine. However, the site continued producing using stockpiled material before returning to full operating capacity.

Tight supply continues to support prices

Copper prices have surged over recent years, reaching a record high of $6.70 per pound, or $13,643 per metric ton, on June 2 as concerns over tightening global supplies intensified.

Analysts believe that any additional decline in Chilean production could push prices even higher, increasing costs for industries ranging from AI data centers and smartphones to electric vehicles, household appliances, and industrial equipment, all of which rely heavily on copper.

Eva Manthey, commodities strategist at ING, said the storms alone are unlikely to fundamentally change the market but reinforce the broader trend of supply struggling to keep pace with demand.

"Given the current supply disruptions, uncertainty surrounding tariffs, and tighter availability of copper concentrates, any prolonged weather-related production outages in Chile would provide additional support for prices," she said.

Natalie Scott-Gray, senior metals demand strategist at StoneX, said uncertainty surrounding potential US tariffs under Section 232, combined with tighter Chinese restrictions on the copper scrap market, has added further pressure to global supplies.

She also noted that Chile has already lowered its copper production forecast for this year by 2% to 5.3 million metric tons and now expects the country to record a second consecutive year of declining output.

While describing the impact of the recent storms on major producers as "temporary and limited" because of established contingency plans, Scott-Gray cautioned that smaller mining companies may be more vulnerable because they have less operational flexibility.

Can copper reach another record high?

Anglo American Chief Executive Duncan Wanblad said the company remains "extremely optimistic" about copper's long-term fundamentals.

The miner reported a 35% increase in first-half EBITDA to $4 billion, driven largely by stronger copper prices.

Wanblad added that Anglo American has reshaped its portfolio into a copper-focused mining company built around some of the world's highest-quality mining assets.

At the same time, analysts warned that this year's unusually strong El Niño weather pattern could create additional disruptions across commodity markets, with both flooding and drought posing risks to copper production.

George Cheveley, portfolio manager for natural resources at Ninety One Asset Management, said storms typically have only short-term effects unless they cause significant infrastructure damage. Drought, by contrast, can have a more lasting impact on water and power supplies, although he noted that most mining companies have contingency plans designed to mitigate those risks.

He added that speculation surrounding potential changes to US tariff policy remains a much bigger driver of copper prices than underlying physical demand.

Global inventories remain tight

Current data show that around 64% of the world's visible copper inventories are now held in the United States as strategic stockpiling and trade arbitrage between the US and China continue to pull supplies away from other markets.

Scott-Gray also noted that inventories on both the London Metal Exchange (LME) and the Shanghai Futures Exchange remain below their respective five-year averages, highlighting the genuine tightness in physical supply.

With three-month copper on the London Metal Exchange trading near $13,750 per metric ton, Scott-Gray believes another record high is entirely possible before the end of the year, particularly as speculative investors continue increasing their long positions across major global exchanges.

Although she expects Chinese buying to slow during August, potentially easing some pressure on LME inventories, she said the biggest uncertainty facing the market remains the US administration's decision on possible Section 232 tariffs and the far-reaching consequences such measures could have for the global copper market.