Copper slumped this week to a new 5.5-year low on global growth fears and concerns about oversupply.
 
“My view on this is we go through cycles,” Michelmore said on a teleconference yesterday.
 
“It’s exacerbated by sentiment and speculation.
 
“The market tries to anticipate where tightness will occur.”
 
Far East Capital managing director Warwick Grigor agreed, saying copper was the latest in a long line of market victims.
 
"In what feels like a rotational assault on commodities, this week we have seen copper succumb to as assault by the traders who are trolling markets, looking for the next likely victim," he wrote today.
 
"This week it is copper. There hasn’t been anything specific that wasn’t on the radar a month ago."
 
Michelmore said with China expected to grow 6-7% this year, the fundamentals for copper were still good.
 
“It’s still a very good number and it’s on a much larger economy than when we were talking 10-12% growth,” he said.
 
He noted that the US had bottomed and Japan and Europe were looking flat, but the rest of Asia was still growing.
 
“On the demand side, things haven’t really changed,” Michelmore said.
 
While Michelmore acknowledged there may be a small surplus this year, he said the bearish outlook for copper doesn’t take into account production disruptions and the underperformance of major projects.
 
He used Rio Tinto’s massive Oyu Tolgoi mine as an example of a new copper operation that hadn’t lived up to expectations.
 
Michelmore’s comments come MMG continues construction of the massive Las Bambas project in Peru, which will become one of the world’s major copper mines when it starts production in a year.
 
But he isn’t concerned about bringing on a major copper operation in the current market.
 
“My own view is that copper will be tightening and sentiment changing in the second half of 2015,” Michelmore said.
 
“If anything, Las Bambas will be coming into the market just when the market needs those tonnes.”
 
Las Bambas is 80% complete and Michelmore said the final months of construction would involve the “fiddly stuff”
 
“It’s that last 20% that takes all that time,” he said.
 
Las Bambas is expected to produce over 2 million tonnes of copper in its first five years, though MMG won’t announce formal guidance until later this year.