All the producers are tinkering with their highest-cost plants, trying to reduce their average cost of production without significant cuts in their capacity in the hope (not unreasonably) that prices will come back – and when they do, their plants will be back in the black.
Under many conditions, the level of demand for a product and the cost of the next available supplier's capacity determine the market price. In theory, the industry cost curve allows companies to predict the impact that capacity, shifts in demand, and input costs have on market prices.
Every metal traded on the LME must conform to strict specifications regarding quality, lot size and shape. Each LME tradeable contract is likewise governed by rules covering (but not limited to) prompt dates, settlement terms, traded and cleared currencies and minimum tick size.
GFMS Thomson Reuter's closely watched annual base metals review and outlook contains some stark warnings for copper miners. The industry has made progress to reduce costs – since the first quarter of 2014 average cash costs have dropped by $303 a tonne according to GFMS calculations.