Global copper supply impingement 'severely underestimated', says Citi

In a note to clients on Tuesday, Citi analysts David Wilson, Nell Agate and Ivan Szpakowski noted: “The full range of first quarter production misses for 2015 further fortifies our view that the extent of supply impingement has been severely underestimated, especially as the weak first quarter output comes in addition to previously truncated production downgrades.”

Last quarter, most producers struggled to maintain stable levels of output. “Glencore, among several other miners including First Quantum (output down 8.4% quarter-on-quarter) and Antofagasta (output down 21.9% quarter-on-quarter) confirmed speculation that producers were unable to match analyst forecasts for first quarter production.”

Glencore saw first quarter output at 350,700 tonnes versus 385,600 tonnes the year before with the fall attributed to poor production at Collahuasi (down 12% year-on-year) and Antamina (down 19% year-on-year) in Chile.

On an annual basis, Glencore's copper production in Australia was down 10% at 64,100 tonnes. In addition, BHP Billiton cut its full-year production guidance by 5.5% or 50,000 tonnes, higher than analyst expectations, partly as a result of the heavy rainfall in March.