RECORD PRICE - AGAIN
Low metal stocks push copper close to $10,000/t
Its not only precious metals achieving really strong prices. Copper is looking good too as a low warehouse stock position has the metal surging towards 10,000/t.
Author: Anna Stablum
Posted: Thursday , 06 Mar 2008
LONDON (Reuters) - Copper prices hit a record high on fresh fund buying on Thursday with traders eyeing $10,000 a tonne on falling inventories in an already tight market.
But the metal steadied as some investors cashed in profits after a breathless rally, which has helped copper gain around 5 percent this week.
Copper for delivery in three months was at $8,720 per tonne by 1359 GMT, down from an earlier record high of $8,820 and $8,785 at mid-session.
The metal, used extensively in construction, is still up $30 from its close of $8,690 on Thursday.
"Oil prices have come off quite a bit. People are taking some profits on the metals side," analyst Michael Jansen at JP Morgan said.
Other key base metals also erased some of their gains, but analysts saw the pull-back as only a brief pause.
"The copper market remains beholden to falling LME inventory and ongoing fears of supply disruptions," analyst Daniel Hynes at Merrill Lynch told Reuters.
"It also reflects the bigger issue of surging investment into the commodity markets as investors seek refuge from weak equity and bond markets, rising inflation and a weak U.S. dollar."
"A lot of people are saying copper could go to $10,000," an LME trader said.
Copper stocks in LME-registered warehouses fell by 2,350 tonnes to 135,800, down by about a third since the start of the year and enough for less than three days of world consumption.
"In reality, there is not much spare metal around," head of resources John Meyer at Fairfax said in a report. "Copper prices are being pushed by investment demand but this is supported by ongoing demand growth for infrastructure development."
Nickel futures rose to a seven-and-a-half-month high of $35,150 and were last at $33,600 against Wednesday's $33,400.
Three-months aluminium was at $3,212 versus $3,208 on Wednesday. Aluminium hit an all-time high of $3,310 in May 2006.
Prices were supported by the surge in U.S. crude to a record high above $105 per barrel.
"Structural tightness in global energy markets and subsequent shifts higher in costs are already constraining metals supply, especially for energy-addicted aluminium," a Barclays Capital report said.
Aluminium's precarious supply outlook combined with the strongest long-run demand prospects of all the base metals is a recipe for a tighter market and higher prices, it said.
Barclays Capital raised its aluminium annual price forecast for 2008 and 2009 to $3,513 per tonne and $4,500, respectively.
Leading European shares were down with the FTSEurofirst 300 falling 0.46 percent to 1295.02 points by 1312 GMT. The dollar hit lifetime lows versus the euro on a weak U.S. economy and worries about a recession, which has galvanised the U.S. Federal Reserve to cut borrowing costs sharply to 3 percent, with further easing expected.
"The market is looking at rising inflation," said Ashok Shah chief investment officer at fund manager London & Capital.
"Falling interest rates will encourage global growth rates to accelerate later but for now everyone is looking to inflation hedges ... across the board to all commodities," he said.
In industry news, Kazakhmys Plc, the world's 10th biggest copper producer, posted a 0.7 percent rise annual earnings per share.
Tin hovered close to its all-time high of $19,375. It hit an intra-day high of $19,350 before being unchanged at $19,250. Zinc was at $2,840 against $2,815 and lead gained to $3,375 from $3,350.
(Additional reporting by Humeyra Pamuk; editing by Chris Johnson)
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