Copper prices have struggled during the second quarter of this year as demand fears continue to restrict the extent of upside moves, while supply disruptions at mine level have more recently provided a floor to prices following the early-year sell-offs.

This is according to global mining and research company SNL Metals & Mining’s ‘May 2015 Copper Service Briefing Service’ report.

The report notes that, as a result, London Metal Exchange (LME) prices were trading within the $5 900/t to $6 150/t range during April.

A key theme in the copper sector has been the divergence in trends in the concentrates and cathode market over the past month.

“In the concentrates market, a sharp tightening of material availability has been highlighted by the weakening in treatment and refining charges since the start of the year,” the report says.

Supply disruptions have been in part accountable, notably in Chile where heavy floods disrupted production at a number of operations, starting from March.

“We now forecast Chilean production at a little over 5.8-million tons this year,” states SNL Metals & Mining.

Meanwhile, likely-in part reflecting recent work-related disruptions, copper, gold and molybdenum producer Freeport-McMoRan recently announced that it had downgraded expected 2015 sales volumes from its Grasberg copper and gold mine, in Indonesia, to 401 t, which was down from its late-January guidance figure of 453 t.

The report highlights that, in addition to supply disruptions, the ongoing strength in smelter and refined output has continued to drive a “healthy demand” for concentrates.

Further, robust offtake from traders, reflecting ongoing requirements for clean concentrates for blending, has had a notable effect on reducing spot terms for high-purity concentrates.

“However, looking ahead, maintenance shutdowns at some smelters in China and elsewhere in Asia scheduled for the coming months may temper concentrate demand somewhat,” the report says.

SNL Metals & Mining also factors in higher mine production over the second half of this year, which could help ease some of the current “tightness” in the spot market.

Nevertheless, for the year as a whole, the research company believes that it is likely that the concentrates market is set to register a tighter position than previously forecast. The company currently forecasts a marginal deficit, which it says will necessitate a drawdown of the large stock of concentrates built up by the industry during 2013 in particular.

In contrast, a tightening availability in the concentrates market, buoyant refined output and weaker demand growth have led to a clear oversupply in the downstream cathode market during the first half of the year.

As detailed in the ‘April 2015 Copper Service Briefing Service’ report, trends in Chinese demand and its property market remain of particular concern.

Reduced demand from the financing sector has also dampened the country’s import appetite for refined copper.

Highlighting the market oversupply, global stock exchanges have “raced” higher year-to-date to 568 t as at April 27 from 307 t at the end of 2014.

Moreover, the report notes that physical premiums have weakened, while the “sharp loosening” of nearby LME spreads also indicates improved material availability.

“On the whole, despite the continued underperformance of mine production, subdued end-user demand is expected to keep the refined copper market in a small surplus of about 100 t to 200 t over the next two years.

“This is expected to keep a lid on yearly average copper prices, which we forecast at $6 052/t and $6 324/t in 2015 and 2016 respectively,” the report concludes.