[miningmx.com] — COPPER prices charged to an all-time high on Tuesday as shipment delays in top producer Chile and robust demand prospects in China further fuelled demand from investors, who have started buying into a new
exchange fund.
Slow production growth after the recession and unrelenting consumption from emerging markets has made copper one of the best-performing industrial commodities of the second half of the year, boosting it by nearly 45% as exchange
stockpiles fell by a third from their February peaks.
Threats to the metal’s already tight supply chain escalated Monday when the world’s No. 3 copper mine, Chile’s Collahuasi, halted shipments of copper concentrate.
On Tuesday the mine’s operators were still scrambling to find alternative export
routes after declaring force majeure.
And China’s imports of refined copper rose nearly 37% in November from a year earlier, reversing a nearly 30% fall in October and showing no let-up in demand from
the world’s top consumer.
“It’s a tight market … It’s probably the tightest metals market out there from a supply-demand balance,” said Evan Smith, co-manager of the US Global Investors Global Resources Fund, with about $850m in assets under management.
On the London Metal Exchange, benchmark copper for three-month delivery soared $191 to a record $9,392 a tonne. It went untraded on the kerb, but was last bid at
$9,365/9,370, up from Monday’s close at $9,201.
On the New York Mercantile Exchange, COMEX copper for March delivery HGH1 closed up 7.00 cents, or 1.7%, at $4.2760 per lb, near an earlier record at $4.2895 per lb.
Copper has risen 4% over the past three days, its biggest rally since December 3, although trading volume has dimmed to around 40% below its 30-day average this week, according to Thomson Reuters preliminary data.
ETF BUILT, INVESTORS COME
The latest gains have been given extra kick by the advent of new exchange-traded funds that could open up the copper market – now dominated by the London Metals Exchange – to more retail and institutional investors who welcome the ease and simplicity of buying shares on an exchange.
The first of three new such funds, run by ETF Securities, registered a 850-tonne increase in the amount of copper backing its ETF, taking holdings to their highest level at 1,445.50 tonnes. That is a fraction of the 363,000 tonnes in LME stocks,
but enough to encourage bigger players to pile into the market, anticipating more to follow.
“There has been CTA/fresh fund buying again in copper, but the market hasn’t got much to sell,” said one London metals trader.
Global Investors’ Smith agreed, pin-pointing ETF investment demand as the driver for the next leg up in copper in 2011.
