Copper prices could rise further if disruptions at the world's two largest copper mines persist, analysts say.
Futures contracts on the metal for March delivery jumped more than 1.5 percent to $2.68 a pound Wednesday after news that BHP Billiton would be halting production at the world's biggest copper mine, Escondida in Chile, ahead of a planned Thursday strike.
"It's presenting the market with a bullish case for a little upside," said Vivienne Lloyd, base metals analyst for Macquarie in London.
Freeport-McMoRan has also warned it will reduce output at Indonesia's Grasberg mine, the second largest in the world, as the company deals with a smelter strike and struggles to renew its mining permit.
Copper 6-month performance on the New York Mercantile Exchange
Reduced or halted production at both Escondida and Grasberg could cut 8 percent of global copper production, analysts said. Just the perception of less supply has helped support copper's gains so far.
The sustainability of higher prices "depends how long the strike is. I think it could change the long-term outlook for the market," said Dane Davis, commodities research analyst at Barclays.
He said sharply reduced copper supply could potentially send prices of the metal to $3 a pound, although he maintains his forecast that prices will average $2.50 this year.
Copper prices have already been on the rise, leaping more than 30 percent last fall as the U.S. dollar weakened around the election and traders took a brighter view on China. The Asian country is the largest consumer of copper in the world.
Macquarie's Lloyd expects the Escondida strike to last one to two weeks, reducing global supply by as much as 45,000 metric tons. Last week, Macquarie raised its copper price forecast by 9.3 percent to $5,850 per metric ton as traded on the London Metal Exchange (LME), or near $2.65 a pound.
While the firm expects oversupply in the copper market to continue weighing on the price this year and next, the market should support a rebound in the years following.
"Traders were already bullish into the strike," Davis said. "This was on the radar for a while. People have watched the negotiations deteriorate."
Unionized workers at Escondida have rejected a sharp bonus cut from BHP, which owns a majority of the Chilean mine. The strike is set to begin early Thursday.
The last worker strikes at Escondida occurred in 2006 and 2011. Copper prices had mixed reactions in the week following, rising nearly 5.7 percent in 2006 and falling 2.5 percent in 2011, according to an analytics tool called Kensho.
"The industry is still obsessively focused on unit cost reductions," Jefferies equity analysts said in a Monday note. They expect wage negotiations to be a major factor in copper prices in coming months as contracts expire for at least five mines in 2017.
"The outcome of negotiations at Escondida will set the tone for other negotiations this year," the analysts said.
— Reuters contributed to this report.
Disclosure: CNBC's parent NBC Universal is a minority shareholder in Kensho.