• Peru's mining sector is a `bright spot' in region, BMI says
  • Analysts expect commodities to bottom in 2016, rebound in 2017

Peru is likely to surpass China as the world’s second-largest copper producer after the South American country’s biggest new mine, Las Bambas, began shipments last month, BMI Research said.

Peru’s copper output will increase 19 percent in 2016 to 1.9 million tons, according to the country’s central bank, as Melbourne-based MMG Ltd. ramps up to full production in the second quarter at Las Bambas. The company said it expects to produce 275,000 to 330,000 tons from the mine this year.

Peru remains "the region’s production growth bright spot," BMI wrote in a note. "Peru is well placed to benefit from stabilizing prices, which we expect will find a bottom in 2016 and begin to trend higher."

Copper prices on Jan. 15 reached their lowest level since 2009, and the value of Peruvian exports should contract for the fourth straight year, according to BMI. The research firm reversed its forecast for Peruvian export growth in response to bearish commodities sentiment, the deterioration of the Chinese economy and a strong U.S. dollar. China is Peru’s primary export market, accounting for about 18 percent of shipments in 2014.

Higher demand for the metal won’t materialize after the Chinese New Year, BMI said. Although copper’s price has dropped 50 percent since 2010, some companies aren’t shelving production plans. Miners, including in Peru and China, are planning 7.88 million metric tons of new copper supply by 2020, equal to an increase of about 44 percent over 2014, according to data from Bloomberg Intelligence.

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