Chile Copper Supply Fraud?

BASE METALS

Copper: Copper prices moved lower overnight, weighed down by the lack of progress over a US-Iran peace deal. Benchmark three-month copper on the London Metal Exchange lost 1.3% to $13,480. Chile is auditing seven executives at its state mining company for allegedly tampering with and overstating 2025 copper production figures, with at least one executive already fired. This presents the risks that actual Chilean supply may have been even weaker than previously reported, compounding the prior week’s downward revision to 2026 production forecasts. Chile recently announced that copper production would fall 2% this year, after initially estimating 3.7% growth back in February. However, with LME copper warehouse stocks sitting near 400,000 metric tons, the highest level since early 2018 alongside elevated COMEX inventory, limits how urgently the Chile supply story can lift prices. Meanwhile, continued worries over sulphuric acid shortages affecting copper producers remains supportive of prices.

Freeport’s Grasberg mine in Indonesia is taking longer than expected to fully restore operations, but should approach full capacity by the end of 2027, it told Reuters on Wednesday. The mine is currently running at 50% capacity and is expected to reach 65% capacity by the end of the year.

Zinc: Zinc fell 0.6% to $3,533. An incident at Nexa Resources Cajamarquilla zinc smelter in Peru has put supply worries back into the picture. The smelter is responsible for producing around 344,400 tons of zinc per year and is the largest in Latin America. The global zinc market surplus narrowed to 32,700 metric tons in March from a surplus of 58,700 tons in February, data from the International Lead and Zinc Study Group showed on Wednesday.  There was a surplus of 89,000 tons in the global refined zinc market during the first three months of the year, compared with a 44,000-ton surplus in the same period of 2025, the data showed.

Aluminum: Aluminum added 0.7% to $3,648. The conflict in the Gulf has removed roughly 4% of global aluminum supply, while damage to production facilities has exacerbated further supply worries.

Tin: Tin dropped 2% to $52,950.

Lead: Lead nudged 0.5% higher to $1,990. The global lead market swung to a deficit of 19,300 metric tons in March from a surplus of 17,500 tons in February, data from the International Lead and Zinc Study Group showed on Wednesday. There was a global surplus of refined lead metal amounting to 38,000 tons during the first three months of 2026, compared with a surplus of 33,000 tons in the same period last year.

Nickel: Nickel shed 1% to $18,740. Indonesia recently suspended nickel mining licenses for several companies after they failed to submit required documentation regarding their 2026 mining plans.

PRECIOUS METALS

Gold: June COMEX contracts fell overnight, pressured by the rise in oil prices, though still find support at the psychological $4,500 level. Gold continues to broadly trade in a holding pattern, awaiting the outcome of President Trump’s pause in strikes against Iran. A resumption of US strikes would spark further oil price gains, extend the inflation shock, and trigger a broad risk-off selloff amid the retaliatory strikes from Iran, while a deal or framework peace agreement would reverse the recent trends across equities, treasuries, metals, and currencies. Yesterday’s FOMC meeting minutes were the key macro event, and they confirmed that “many” voting Fed members are now moving toward raising rates as inflation remains above the 2% target. In Fed language, “many” falls just short of a “majority” and suggests that the three Fed presidents who dissented on the decision to leave the statement unchanged had support from some other non-voters. For the Fed, it would appear that they are behind the curve on interest rates.

Expectations that the Fed will raise rates, higher yields, and a stronger dollar reinforce the challenging environment for gains. Spiraling inflation concerns are prompting the aggressive selling rather than the classic flight-to-quality buying one would expect given the geopolitical backdrop. Recent trends have shown that gold is now positively correlated with equity performance. Still, structural support for gold remains intact with central bank purchasing expected to offer underlying support amid lower prices and elevated yields. Several large banks have trimmed their near-term price forecast for gold amid softer investor demand; JP Morgan cut its average price forecast to $5,243 from $5,708.

Silver: Silver futures are down 1.5% to $74.95.

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