The bank says the mining companies in its coverage universe have all missed BMO expectations for most metals, even factoring in forecast reductions throughout the year. Copper and zinc estimates, for example, were revised lower by 7% and 7.65%, respectively.
"When coupling quarterly production shortfalls with production estimates that have already been revised downward, the 2017 production misses thus far are that much more magnified," said analyst Alex Terentiew.
Of the 10 commodities BMO tracks, all but one missed forecasts, with bauxite being the exception with a 0.3% outperformance.
The upside of all this, of course, is that these misses in the midst of tight markets have been supportive for metals prices, and to a larger degree than many appreciate, says Terentiew.
"While positive demand sentiment on the back of a better-than-expected global economy has provided a backdrop for higher metal prices, we think supply-side challenges and production shortfalls potentially have been a more important driver of the current price strength," he said.
The good news for those worrying that the recent strength of copper and zinc has about run its course, is that Terentiew expects production misses - and risk-driven fear of the same - to continue into the new year. New copper and zinc supply next year should be dominated by three new mines (Dugald River in Australia, Gamsberg in South Africa, and Cobre Panama in Panama) that each come with the risks attached with start-ups and potential delays.
"Add to this expectations for elections in the (Democratic Republic of Congo), a new president in Chile, Grasberg's ultimate ownership not yet fully resolved, along with the potential for additional copper mine strikes and uncertain weather impacts from a possible La Nina, and the trend of supply-side disruptions may extend into 2018," he said.
Meaning prices may surprise the market again with their continued strength.