Copper futures finished with healthy gains on Thursday, even though they pulled off the record highs by the settlement, as funds continued their week-long buying spree in anticipation of Hurricane Rite's possible punch to the US Gulf Coast, traders said.
"High demand, not enough material. Long view, short view it all amounts to the same thing: a bull market with a little bit of profit taking at the end of the day," said one New York copper dealer.
In New York, New York Mercantile Exchange's Comex division December copper futures soared to a fresh contract high at $1.7250 a lb., and settled at $1.71, up 0.35 cent.
Spot September charged up to a record level at $1.8210 a lb., but finished at $1.81, a 1.35-cent gain. Comex estimated final copper volume at 13,000 lots, similar to Wednesday's 12,948-lot tally.
Traders said funds have been buying mostly on fears of possible damage to oil and gas facilities on the US Gulf Coast from Hurricane Rite's onslaught.
But speculative short cover buying has accelerated the move to successive all-time highs. "We've gone up 12 cents in the last few days and it took us two weeks to lose 10 cents, which attracted a lot of shorts into the market. I think they are the ones who got out this week," said one copper dealer. In addition, he said, some fund buyers have been getting long copper.
"You have a lot of people concerned about inflation, a lot of people concerned about energy prices. The hurricane is keeping things going. You've got gold moving higher.
I think a lot of money is being poured into commodities and saying 'let's get long because we're spending a fortune on Quatrain,' along with concerns about tightness in copper," the trader said.
Industrial metals have been firming along with oil and gas prices for most of the week as funds seek tangible assets with the threat of damage to US Gulf Coast oil refineries from Category 4 Hurricane Rita.
The fast gains in London copper prices to record levels have been a major influence to Comex as well. Funds there also bought on worries of the potential impact from Rita.
"Most of the gains were in London where prices gapped open. Even though stocks are still going up there, this is still a bull market. There's tightness in the cash market in both New York and London.
There's clearly not a lot of material around," a trader said. London Metal Exchange three-months copper jumped to a new peak at $3,788 a tonne, but settled around $3,753 a tonne, up slightly from Wednesday's previous record close at $3,750 a tonne.
LME copper warehouse stocks went up 550 tonnes to 83,675 tonnes on Thursday. Comex copper inventories fell 131 short tons to 8,949 tons on Wednesday.
After the Comex close on Wednesday, the union said talks to end a crippling strike at copper miner Asarco's Arizona and Texas operations ended with no progress on Wednesday.
Union representatives met in Tucson, Arizona, to try to resolve differences with management of Asarco, a unit of the world's No 3 producer, Group Mexico.
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