Copper prices rose to fresh record highs on the London Metal Exchange (LME) on Wednesday, boosted by short-term supply problems in Canada, the United States and Zambia, traders said.
Three months prices leapt to $3,890 a tonne in late European business, up 1.2 percent from Tuesday's close of $3,838. "We are in uncharted territory. Look for $3,900 to be tested, with $4,000 as next major resistance after that," Man Financial's Edward Meir said.
Copper, used in construction and electronics, is on the crest of a major buying wave that has been driven by demand from China, speculative activity and, most recently, supply problems.
In Canada, Falconbridge Ltd declared force majeure on Tuesday at its Kidd Creek copper-zinc plant as a strike entered its fourth day.
In Zambia several plants have cut production or closed and more are threatened by energy shortages, although on Wednesday the government scrapped import duty on fuel in an attempt to keep the copper sector running.
In the United States, Asarco closed its Hayden smelter in Arizona for repairs. The company is already gripped by a 3-1/2-month strike, reducing output by around 20 percent.
LME warehouse copper stocks fell 1,375 tonnes to 74,975 on Wednesday. Stocks have fallen some 11 percent from 11-month highs of 84,300 tonnes in late September.
Investment fund activity has been ever-present this year in the copper market's relentless rise, and there are no signs yet that investors are thinking about cashing in profits.
"The volumes are mot that great and the air is very thin up here. Although a lot of the funds are maximum long there are still some people putting their money on the table," one said.
Speculative money has been fuelling a general commodities boom as cash has shifted away from other asset classes this year.
China is still growing rapidly, US growth remains robust and much rebuilding is needed in hurricane-hit New Orleans.
Given the supply interruptions from strikes and natural disasters, copper could jump another 10 per cent, especially as inventories are still so low, he said.
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