US copper futures ended on Tuesday at record closing levels, driven up when funds bought a slew of healthy US economic news and speculators responded to widespread fears of a short squeeze if a huge rumoured short position comes due in December, traders said.
Trade began with narrow ranges and little action, but copper had begun climbing to successive new record levels both in New York and in London markets.
The Comex division of the New York Mercantile Exchange's benchmark December futures set a fresh contract high at $1.9405 per lb., and ended with 1.85 cents gains at $1.9320.
Spot November rose 2.10 cents to close at $2.0275 a lb., the second day in a row it finished at a record high. Comex estimated final copper volume at 27,000 lots.
Some traders said they thought speculators were trying to take advantage of a possible short squeeze after widespread speculation that China's State Reserve Bureau was holding a large short position on the LME, a bet that prices will fall.
As the December delivery date approaches, the buying intensifies, as profiteers hope to cash in on China having to resolve the alleged massive short positions, thought to be around 150,000 to 200,000 tonnes. Others were more cautious about the reasons for trading. "It's possible," said one New York trader. "There has been some spotty buying, but there has also been some really good selling around.
Not chasing it if it goes down, but when it rallies, they are grabbing some quick profits." Would-be profiteers in any squeeze play, "Are creating opportunities for some of the bigger boys to get out." "Be careful what you ask for," he warned.
A lot of it is fabricated." The SRB has said it would auction 20,000 tonnes of copper on Wednesday. Many traders doubt whether the Chinese agency has the clout to lower prices significantly and viewed their attempts to do so as jawboning.
Sales rose 0.9 percent excluding autos, showing resilience among consumers. LME three-month copper soared to a new all-time high at $4,175 a tonne, up from the previous record at $4,130.
It closed at $4,136 a tonne, up $10 from the previous close.
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