Insights 
VT 
Chile’s largest copper mine producer plans to raise its premium for European customers to $325 per ton from the previous $230, due to a supply shortage. This is attributed to a 10% decrease in production compared to last year and a 25% drop in output in August due to disruptions at the El Teniente mine.
The El Teniente mine faced a production stoppage following an accident, affecting overall supply. The relevant authority states that the investigation of the incident will take several months, creating uncertainty regarding the resumption of full operations, which could impact copper prices in the short term.
This scenario supports concerns surrounding copper supply, potentially limiting downward trends in copper pricing. This information is intended for those with an interest in commodity markets and reflects current challenges in the copper supply chain.
Chile’s top producer is raising its physical copper premium to $325 per ton for European clients. This is a significant jump from the roughly $230 we’ve seen in recent years. The move is a direct response to tightening supply and ongoing production issues.
The El Teniente mine stoppage is worsening an already tight market, with the company’s output down 10% this year. We’re seeing this reflected in global inventories, which are mirroring the historic lows of late 2023. Recent data from the LME shows warehouse stocks are at just 65,000 tonnes, which is critically low.
This isn’t just a Chilean problem, as we’ve also been tracking sporadic labor and community disruptions in Peru throughout 2025. These combined supply-side headwinds are creating a strong floor under the copper price. It limits how far the price can fall, even if wider economic data softens.
On the demand side, things still look robust, which will likely amplify the effect of these supply cuts. China’s latest Caixin Manufacturing PMI came in at a surprising 51.2, signaling expansion and continued appetite for industrial metals. The ongoing global push for electrification and grid upgrades provides a powerful long-term tailwind for copper consumption.
For derivative traders, this situation suggests buying long-dated call options to capture potential upside while limiting risk. Given the supply uncertainty, we expect implied volatility to rise, so establishing positions sooner rather than later could be advantageous. Selling out-of-the-money puts or using bull put spreads could also be a viable strategy to collect premium from the expected price stability.
