Copper breached record levels in LME as investors queued in to buy copper as a hedge against inflation and currency corrections, taking it 30% up this year and pushing it to a flow headed for second annual gains.
The metal touched a three and a half year high in Shanghai and climbed to a record in London and New York.
The wide spread optimism prevailing in the markets of a healthy recovery is acting as a magical potion.
Three-month contract on the London Metal Exchange gained 0.9 % to jump to an all-time high of $9,580 a metric ton and was seen trading at $9,565 a ton at 11:25 a.m. Singapore time.
The rise of copper is attributed to robust demand expected in the next year slated to begin Saturday. Mining companies are finding it difficult to cope with surge in demand and mine copper accordingly. Scarcity of quality ores also forms a problem.
435,000-ton global deficit in refined copper is estimated by International Copper Study Group for the coming year even as LME warehouses are experiencing a decline. The recent data shows a shrinking of 25 % of LME copper inventories this year.
In the biggest decrease since the week ending September 9, inventories in the Shanghai Futures Exchange also dipped 7,410 tons to reach 120,426 tons last week.
Chinese demand for copper is slated to rise as huge expansion plan in its power grids is in cards.
The current price rise of copper is however based on speculations and not much of delivery is taking place. But market fundamentals being strong, the recovery being healthy, demands are expected to be robust next year—experts contend.
March contract copper on the Comex climbed 0.8% to reach $4.396 a pound before being traded at $4.378, up 31 % this year. The high is the highest ever for a most-active contract.
Copper slated for delivery in April, on the Shanghai Futures Exchange inflated 0.4 % to 71,780 yuan ($10,864) a ton which on record is the highest price since May 2007.
Tin, LME’s best performer this year, rose to $27,500 a ton on Nov. 9 on supply constraints.
A La Nina weather event had taken toll on tin production in Indonesia, the biggest exporter and Australia. Blackouts in China also diminished tin output there.
Power cuts in China, the world’s largest producer, also curbed output.
Ban in mining in the Democratic Republic Congo, Africa’s largest producer of Copper has also been a production dampener.
Aluminum in London was down 0.2 % to reach $2,448 a ton while zinc was down 0.6 % to rest at $2,393.75 a ton.
Nickel toppled 0.7 % to $24,125 a ton, while lead jumped 0.3 % to $2,525 a ton.