Rio Tinto's copper chief Bold Baatar said on Tuesday the short-term outlook for copper was "quite healthy" with global inventories trending lower and mine disruptions eating into supplies in Latin America.
"We see that the fundamentals are pretty good," he told Reuters after work began on the underground phase of the Oyu Tolgoi copper mine in Mongolia. It will be the world's fourth-largest copper mine when fully operational.
"Physical inventories of copper are at multi-year lows," he said, adding that copper demand in China was "relatively strong."
Global copper stocks monitored by the London Metal Exchange fell to their lowest level in 17 years last month as the global economy gathered momentum after the coronavirus pandemic, while stocks on the Shanghai Futures Exchange have fallen in recent weeks on a pick-up in seasonal demand and lower prices.
Benchmark copper on the London Metal Exchange fell 0.6% to $8,876 a tonne on Tuesday amid a strong dollar, concerns about the knock-on effects of the US banking crisis and the fact that Chinese demand is not growing as quickly as some had hoped.
But the contract is up more than 5 percent so far this year and about a quarter from mid-July when it hit its lowest level since late 2020.
"In general, in effect, there is a significant shortage of copper due to a lack of supply in Latin America and disruptions in countries like Peru.
"So right now, even in the short term, the demand situation is quite healthy," Baatar said.
Copper mines in Peru and Chile have been disrupted by protests that have blocked roads and affected the flow of ore supplies and concentrate shipments in and out.
However, power data analyzed by Reuters show activity picking up again at Peru's main copper mine, which could boost supplies from the world's No. 2 Producer countries.
