Copper futures closed at a record in New York on speculation that demand will outpace production as a global recovery sparks construction of new homes and appliances.
Output shortages of 800,000 metric tons may occur in 2011 and in 2012, compared with a balanced market this year, said Trafigura Beheer BV, which considers itself the second-largest trader of industrial metals. Copper inventories may drop to an all-time low of less than one week’s usage, Bank of America Merrill Lynch said. Prices have jumped 23 percent this year.
“The basic fundamentals are bullish,” said Lannie Cohen, the president of Capitol Commodity Services Inc. in Indianapolis. “China is still strong. Our recovery is looking better. It seems there is not enough copper to meet demand.”
Copper futures for delivery in March rose 5.1 cents, or 1.3 percent, to settle at $4.1005 a pound at 1:18 p.m. on the Comex in New York, the highest ever.
Yesterday, the metal reached $4.1315, the highest since May 5, 2008, when futures touched an intraday record of $4.2605.
Prices still “have a chance to get to the old high” by the end of the year, Cohen said. Copper may rise above $5 in 2011, he said.
This year’s rally has been fueled partly by a 30 percent drop in stockpiles monitored by the London Metal Exchange, which are headed for their first annual decline since 2004.
ETF Metal Demand
Consumers are “concerned” about exchange-traded funds backed by physical copper, Simon Collins, head of refined metals at Trafigura in Lucerne, Switzerland, said in an interview on Dec. 6. Such funds “will result in higher prices,” he said.
In October, JPMorgan Chase & Co. and BlackRock Inc. said they were preparing to introduce copper ETFs, providing investors access to the metal in the form of an equity-like product. Glencore International AG is the largest trader of industrial metals, according to Trafigura estimates.
On the LME, copper for delivery in three months added $135, or 1.5 percent, to $9,015 a metric ton （$4.09 a pound）. The price rose to an all-time high of $9,044 yesterday.
Aluminum, lead, zinc and tin also gained in London. Nickel fell.
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