COMEX copper futures closed 2.3 percent higher on Tuesday on the back of production problems at Chile's Codelco, compounding the already tight supply-demand imbalance in the market, sources said.
"Supply is still tight to the point where if you have any concern about losing supply in this market, you're going to see an immediate reaction to higher prices, which was very indicative of what was seen today," said David Meger, metals analyst with Alaron Trading.
Copper for September delivery settled up 7.90 cents, or 2.3 percent, at $3.4610 a lb on the New York Mercantile Exchange's COMEX division, near the upper end of its $3.35 to $3.4750 trading band.
Spot July rose 5.50 cents to $3.5385, after dealing between $3.4455 and $3.56. COMEX final copper volume was estimated at 13,000 lots, in line with the previous 11,753 lots. On Monday, Codelco, the world's largest copper miner, said a rock slide at its Chuquicamata mine had affected a conveyor belt, cutting production at the massive mine by 1,000 tonnes per day of copper concentrates.
"Further rallies in the copper price are likely should the situation at Chuquicamata turn out to be far more serious with production affected for months rather than weeks," said Robin Bhar, metals analyst with investment bank UBS.
The Conference Board reported its index of consumer sentiment rose to 106.5 in July. Existing home sales dropped in June, but fell by less than economists expected. The euro fell 0.5 percent on the day to $1.2570, and was on track for its largest one-day drop in a week.
Looking at demand, Chinese import data showed the world's largest consumer of the red metal imported 52.3 percent less refined copper in June compared with year-ago figures, official data showed on Tuesday. London Metal Exchange copper warehouse stocks fell 1,000 tonnes to 96,300 tonnes on Tuesday, while COMEX inventories were even at 7,144 short tons in Monday's data. LME three-months copper closed up $280, or 3.9 percent, at $7,440 a tonne.