LONDON: Copper prices rose on Thursday as the threat of disruption at a mine in Peru underlined fears that the market is undersupplied, while investors waited for news from US-China trade talks starting in Beijing.
Benchmark copper on the London Metal Exchange (LME) traded 0.6 percent higher at $6,372 a tonne in official rings, edging up towards last week's 8-1/2 month high of $6,555.50.
Protests at Las Bambas in Peru showed no sign of abating, days after the mine's operator, China's MMG, warned it could declare force majeure on contracts.
Stockpiles of copper in LME-registered warehouses, meanwhile, at 169,950 tonnes slipped back towards 11-year lows below 120,000 tonnes reached earlier this month.
However, in China, the world's largest consumer of industrial metals, stockpiles in Shanghai Futures Exchange warehouses were sharply higher at 269,172 tonnes following a seasonal lull in demand.
A Reuters poll showed factory activity likely contracted for a fourth straight month in March, suggesting weaker Chinese demand for raw materials.
"The LME looks tight but the Chinese market is looking pretty well supplied for the moment," said ING analyst Warren Patterson.
Any resolution of the US-China trade talks could push prices higher, he added. Metals prices fell sharply last year when the dispute began.
TRADE TALKS: China has made unprecedented proposals in talks with the United States on a range of issues including forced technology transfer as the two sides work to overcome remaining obstacles to a deal to end their protracted trade war.
US GROWTH: The US economy slowed more than initially thought in the fourth quarter, keeping growth in 2018 below the Trump administration's 3 percent annual target.
CHINA SCRAP: China aims to cut solid waste imports to zero by next year.
COPPER WARRANTS/SPREAD: One entity held more than 90 percent of copper warrants on the LME. But a $3 premium for cash copper over the three-month contact suggested traders were having little difficulty accessing metal.
COPPER TC/RCs: China's top copper smelters lowered their floor treatment and refining charges for the second quarter of 2019 by more than 20 percent, sources said, indicating a tighter copper concentrate market.
CHINA IMPORT PREMIUMS: Chinese copper import premiums fell to $55.50, nearing a two-year low of $52.50 reached earlier in March.
DEFICIT: The 24 million tonne a year copper market saw a deficit of 387,000 tonnes last year, the International Copper Study Group (ICSG) said. Analysts expect another shortfall this year.
OTHER METALS: LME aluminium traded up 0.1 percent at $1,912 a tonne, zinc did not trade but was bid unchanged at $2,887, nickel traded down 1.4 percent at $12,875, lead was bid 0.8 percent higher at $2,022 and tin traded up 0.1 percent at $21,360.
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