Dec 6 (Reuters) – London copper prices rose on Monday after a decision by MMG Ltd (1208.HK) to shut down production at its Las Bambas mine in Peru exacerbated supply concerns in an already tight market, although the metal’s gains were capped by a firmer dollar.
Three-month copper on the London Metal Exchange rose 0.5% to $9,460 a tonne, as of 0540 GMT, while the most-traded January copper contract on the Shanghai Futures Exchange inched up 0.1% to 69,300 yuan ($10,879.12) a tonne.
MMG said on Friday it would shut down the Las Bambas mine, one of Peru's largest copper mines, by mid-December because of a road blockade.
Logistics and supply chain bottle necks have led to low copper inventories in some regions, while there might be traders building invisible stockpiles betting on a bullish copper outlook, said CRU analyst He Tianyu.
Copper demand is good in Europe and the United States, but consumption in China is weaker than expected in the traditionally strong season due to high premiums and semi producers cutting down on production to save costs, the analyst said.
Stockpiles of the metal, widely used in power, manufacturing and infrastructure sectors, dropped to a record 169,599 tonnes in Chinese bonded warehouses last week.
On-warrant LME copper inventories were at 70,275 tonnes, down over 70% from August highs. ShFE stockpiles fell to 36,110 tonnes last week, down 84% from May’s 229,179 tonnes.
Chinese refined copper spot premium surged to a record 2,200 yuan a tonne on Nov. 19 as an issue over value-added tax on imports exacerbated tight supply, but it has eased since then to hit 315 yuan a tonne on Friday.
The dollar index was up 0.1%, making the greenback-denominated commodity more expensive for those holding other currencies.