Analysts believe the quake in southwestern China can trigger another surge in copper prices globally.
The market is now eyeing any fresh lead from China after the 7.8 magnitude tremor struck Sichuan province that sent shock waves as far away as Thailand and Vietnam.
International copper prices are also expected to move north amid reports of a possible miners' unrest in Peru, they said.
Miners in Peru - a major producer of copper after Chile - are demanding better wages, and have threatened to strike if their demands are not met.
Striking workers have time and again played a major role in the spiralling prices of the red metal, which is extensively used for making pipes and cables and also for electrical wiring.
"Supply disruptions have been the key factor behind spiralling copper prices, the strike in Chile's Codelco being the latest example," said Amar Singh, head of research (commodities), Mumbai-based Angel Commodities.
A miners' strike in Chile's state-owned Codelco which started on April 16, continued for 21 days, caused a loss of about $100 mln to the mining major, analysts said.
The labour unrest affected three out of the five mining divisions of Codelco - the world's largest copper producer - impacting 28 per cent of the company's total output and 3 per cent of the global copper production, slowing production by an estimated 21,000 tonnes.
Copper prices have come a full circle from April 15 - a day before miners at Codelco struck work - when LME three-month copper was at $8,430 a tonne (about Rs 354, 903), to exactly the same level on May 7, a day after the strike was called off. In the wake of supply threats from Chile, three-month copper prices rose to as high as $8,720 a tonne.
"Sentiments have reversed now, as the LME-accredited warehouses on Friday rose over 10 per cent or 11,150 tonnes," said Hitesh Jain of IL&FS Investsmart India.
Daily warehouse stocks data Friday showed that the metal was added to warehouses from Busan and Gwangyang in South Korea.
"It shows that copper from China is now making inroads in to the LME warehouses," Jain said.
Busan and Gwangyang in South Korea are the two LME warehouse locations, which are nearest to China.
LME warehouse data today showed a gain of 125 tn in copper warehouse stocks, mainly from Busan, South Korea, leaving the metal's stocks at 121,775 tonnes.
"Even at current levels, inventories in LME warehouses are down a whopping 77,150 tonnes or 39 per cent from the levels at the beginning of this year," said Aurobinda Prasad, analyst with Hyderabad-based Karvy Comtrade.Traders said adding to the strike, anxiety related to tight supplies have also boosted the sentiment.
"Speculations, more than the actual harm due to workers' unrest at Codelco, took the prices higher," said Surendra M Mardia, president, Bombay Metal Exchange.
As copper inventories in the LME-monitored warehouses swell, prices take a beating and are easing now.
Since May 7, after the strike at Codelco ended with the Chilean government's intervention, copper price on the London Metal Exchange have slipped $250-$300 a tonne or more than 3 per cent.
"If current situation prevails, I see copper on LME at $7,500 a tonne by the end of this month," Mardia said.
He expects the red metal to trade in the range of $7,000-$8,000 a tonne, by the end of this year, provided there are not much supply side issues supporting an upside.
Supply troubles
Supply threats have always swayed copper prices. China, which witnessed severe snowstorms in February this year, was forced to shut down its aluminium, zinc, copper and lead smelters across the country. Jiangxi Copper, the country's largest copper producer lowered its production capacity by more than 40 per cent.
"The first quarter of the year saw a surge of 25-27 per cent in international copper prices mainly on the back of supply-related troubles," Jain of IL&FS said.
The epicentre of Monday's quake in China was around areas, which mainly have lead and zinc mining operations. As of now, nothing can be said of the aftermath, said another analyst with a Mumbai-based brokerage firm.
"No quantum of damage can be substantiated as yet. It is believed that the tremors might have impacted underground zinc mines and copper, aluminium and lead smelters in the Sichuan province. We need confirmation, though," Jain said.
According to the International Copper Study Group's latest forecast, the global copper market is estimated to be in surplus of around 85,000 tonnes this year, while 2009 can witness a larger surplus of around 430,000 tonnes.
But in the present scenario another short-term upside in copper prices may be in the offing.
