A further 15% of global copper supply is at risk from upcoming wage negotiations in Chile, according to ANZ Research senior commodity strategist Daniel Hynes.
"In the copper market we're seeing an increasing amount of supply disruption," he told delegates June 7 at the Association of Mining and Exploration Companies Convention in Perth, Australia.
The supply disruption was prompted by a strike at BHP Billiton Group's Escondida mine in February that lasted more than 40 days and is estimated to have cost the mining heavyweight about US$1 billion.
"We've seen obviously this year, the strike at Escondida, which was the longest running strike in its history and certainly resulted in Chilean copper mine supply falling by nearly 25% earlier this year," Hynes said.
"We think the concerns around further wage negotiations in Chile will create even greater disruption in the copper market."
Labor contracts for several other Chilean mining operations are due to come to an end this year, which could lead to strike action if companies and workers are not able to reach a new agreement.
Wage contracts are due to expire at Glencore Plc's Collahuasi mine, the Mantos Blancos mine and Codelco's Radomiro Tomic mine.
Meanwhile, China's move to shut down coal and steel production capacity is likely to be a lot more gradual this year, according to Hynes.
"In China, once again they continue to shut down capacity … but the issue they had is they did it too quickly."
In 2017, the Asian powerhouse is aiming to curb its coal production capacity by 150 million tonnes and its steel production capacity by 50 million tonnes.
By comparison, China slashed its coal capacity by just under 300 million tonnes and its steel capacity by about 65 million tonnes in 2016.
"They were less than half through that [target] by August  and then quickly by September/October they completely met those targets," Hynes said.
"So that caused a lot of confusion in the market and we saw panic buying as a result and that really pushed up prices. This year, they are going to be a lot more subdued, a lot more gradual in those closures."
Hynes said the more paced capacity cuts will be supportive for import demand into China.