BHP to SFR: ASX copper stocks on radar amid dwindling supply  

Highlights

• Shanghai is open for business after two months of strict lockdown due to the widespread COVID-19.
• The demand in the commodity sector is anticipated to rebound on the Chinese stimulus.
• Chile, the top copper producer in the world, registered a decline in April copper output

Shanghai is open for business again. The two-month-long lockdown has been lifted from the Chinese financial capital. To pick up the pace and give stimulus to the economy, the Chinese government has announced a package of 33 measures.

The effect of relaxed lockdown measures could be seen in the commodity prices, including crude oil, copper, and iron. The market is expecting a boost in downstream consumption.

Also read: 3 ASX copper stocks in focus as red metal rallies on China demand hopes

The opening of the Chinese market coincides with an important industry update- the world’s largest copper producer Chile reported a fall in its production in April. State-owned miner Codelco registered a 6.1% decline in copper production in April while Glencore’s JV Collahousi posted a decline of 26.5% in its April production. The figures are on a Y-o-Y basis.

Chile’s production may fall further in the coming months as the government has initiated a sanction process against Antofagasta Minerals’ Los Pelambres copper mine for violating environmental regulations. The sanctions could lead to a loss of the permit, closure, or hefty fines on the company.

Another factor impacting copper production is the ongoing violent protests against mining companies in the world’s no. two producer Peru.

The supply side seems to lag behind the demand in coming days. This demand and supply dynamics could see the price of copper surging in the near term.

In view of these global developments, let us flick through some of the Australian copper players.

BHP Group (ASX:BHP)

BHP Group reported a copper production of 369.7kt during the March 2022 quarter, a dip of 6% with respect to the previous corresponding period (pcp). The Company also lowered its FY22 copper production guidance to 1,570-1,620kt from its earlier estimates of 1,590-1,760kt.

Rio Tinto (ASX:RIO)

Rio Tinto’s copper production for the March quarter stood at 125kt, 5% lower than the previous quarter but 4% higher on a Y-o-Y basis. The Company has kept its annual production guidance unchanged in the range of 500-575kt.

OZ Minerals (ASX:OZL)

OZ Minerals is engaged in copper and gold production. The company has its operations in Australia and South America.

During the March 2022 quarter, the Company reported copper production of 30.3Kt. The company has provided copper production guidance of 127-149kt.

Recently, OZL signed a conditional binding Terms Sheet with Havilah Resources Limited (ASX:HAV) to acquire the Kalkaroo Copper Project. The project is in the pre-feasibility study stage and is potentially one of the largest undeveloped open-pit copper-gold deposits in Australia.

Sandfire Resources Limited (ASX:SFR)

Sandfire Resources recorded a significant increase in its copper production during the March 2022 quarter. The Company reported 28.774kt of copper production, a 54% quarter-on-quarter increase.

The Company has provided production guidance of 92-95kt for FY22.