July 27, 2016 / 7:27 AM / 2 years ago

UPDATE 1-Antofagasta sees full-year copper production at lower end of forecasts

* Cost cutting on track

* Analysts still bearish on outlook for copper prices (Adds detail)

LONDON, July 27 (Reuters) - Chilean copper miner Antofagasta said full-year copper production would be at the lower end of the 710,000 to 740,000 tonnes it predicted in January as a global market surplus shows little sign of easing.

In common with other mining companies, Antofagasta has this year staged a recovery from the hammering inflicted by an extreme boom-bust cycle after a weaker Chinese economy cut into demand.

But investors are still nervous as commodity markets are oversupplied and asset sales to reduce debt take longer than some would like.

Antofagasta shares eased 0.6 percent by 0810 GMT.

Even with production at the lower end of guidance, Antofagasta said its efforts to drive down costs were on track.

“Although we now expect production for the full year to be at the lower end of the range announced in January, we remain confident that we will continue to deliver on our cost control and operational efficiency objectives for the full year,” Antofagasta CEO Ivan Arriagada said.

For the second quarter, copper production was 166,200 tonnes, a 5.8 percent increase on the first quarter as production increased at Los Pelambres, Zaldivar and Antucoya.

It said full-year output was at the lower end of guidance as improved technology to thicken tailings was taking place.

Cash costs before by-product credits and net cash costs were $1.60/pound and $1.26/pound respectively it said. That compared with $1.88/pound and $1.53/pound for the same period in 2015.

Chinese demand growth is still too sluggish to make a dent in a market expected to remain oversupplied, although the prognosis for copper is less bearish than for other base metals.

The benchmark contract has bounced off the near seven-year low of $4,318 hit in January and has mostly traded in a range between $4,500 and $5,000. (Reporting by Barbara Lewis; additional reporting by Mamidipudi Soumithri in Bengaluru and Pratima Desai in London; Editing by David Holmes and Susan Thomas)

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