Copper and Base Metals: LME Daily — 2026-10-12

Top developments

Chilean production slump and labor unrest squeeze supply

Data released this week by Cochilco revealed that Escondida, BHP’s flagship mine in Chile, saw its August output fall by 27.6%, contributing to a 12.7% year-on-year drop in Chile’s national copper production to 366,300 tonnes. This decline is exacerbated by intensifying labor disputes; two unions at Antofagasta Minerals’ Centinela mine initiated an indefinite strike on October 7, with hunger strikes reported, warning that production impacts will become visible in November. These disruptions reinforce the tightness in global supply, supporting LME copper prices which rose 1.6% on Friday to $14,541/ton.

Smelter treatment charges turn negative, threatening benchmarks

A significant structural shift is occurring in the copper supply chain, with spot treatment charges (TCs) falling to approximately minus $240 per tonne in early October. This means smelters are now paying miners for concentrate, a reversal of traditional dynamics driven by severe concentrate scarcity. Robert Friedland, a prominent mining figure, has warned that the annual benchmark for 2027 may not be agreed upon if these negative fees persist, indicating a fundamental imbalance where high-grade miners hold the leverage over processing capacity.

Chinese demand returns post-holiday, boosting base metals

Base metals rallied broadly as Chinese manufacturers returned from the week-long National Day holiday with strong buying interest. LME copper led the gains alongside tin, which surged 3.02%, while zinc and lead also posted significant increases. Aluminium rebounded from an eight-month low, rising 0.3% to $3,058/ton, while copper hit a two-week peak at $14,585/ton, supported by restocking expectations and active demand signals from Shanghai Futures Exchange (SHFE) participants.

Local view

Chile: Local media outlets like Diario Estrategia and Guía Minera de Chile are highlighting the paradox of record-high prices coinciding with "magro" (lean) production futures. Analysts note that despite copper trading at $6.66/lb (up 2.3% weekly), the average annual price of $6.11/lb is 40.4% higher than in 2025, yet domestic output continues to struggle with operational inefficiencies and social conflicts.

China: Domestic commentary from Sohu and Investing.com.cn indicates that copper prices faced resistance at the 6.75 USD/lb level due to macro concerns, but the post-holiday return of buyers has stabilized sentiment. Reports suggest that while aluminum faces rigid supply constraints, copper remains the strongest performer due to mine-side tightening and inventory mismatches.

Context & numbers

• LME Copper: Closed the week up 2.0%, ending at $14,541/ton on Friday, Oct 9.
• Chile Production: National output fell 12.7% YoY in August; Escondida specifically dropped 27.6%.
• Smelter Fees: Spot treatment charges are near -$240/tonne, reflecting extreme concentrate scarcity.
• Aluminium: Rebounded to $3,058/ton after hitting an 8-month low earlier in the week.

On the radar

• Centinela Strike Impact: Watch for November production data from Antofagasta Minerals, as the indefinite strike started October 7 begins to materially affect quarterly output figures.
• 2027 Benchmark Negotiations: The breakdown in TC negotiations could lead to a fragmented pricing model for 2027, moving away from a single global benchmark.
• US Tariff Policy: While the COMEX-LME spread has narrowed, the threat of US refined copper tariffs remains a latent risk factor for global arbitrage flows.