Copper set successive record highs on Tuesday as a force majeure in top producer Chile fanned supply concerns and attracted fresh fund buys while import data showed demand from top consumer China remained strong. Benchmark copper for three-month delivery on the London Metal Exchange traded at $9,354 at 1505 GMT, from $9,201 at the close on Monday.
The red metal, used in power and construction, earlier pushed to a new record of $9,392 a tonne, having gained around 26 percent this year, compared with a 140 percent rise in 2009. "The small accident with Collahuasi... reinforces the outlook copper supplies are tightening. And the data from China overnight shows that the world's largest consumer is still a strong player," said Andrey Kryuchenkov of VTB Capital.
"This is year end and people are squaring their books but it seems like there are fresh funds coming in." The world's No 3 copper mine, Chile's Collahuasi, said on Monday it halted shipments of copper concentrate after a weekend accident shut its key sea port terminal, fuelling global supply worries.
Falling ore grades, disruptions and project delays, mean that copper supply will, possibly starting this year, fall short of demand estimated at about 19 million tonnes this year. Worries about supply in the near term have kept copper into a $37.50 a tonne backwardation - premium for cash material over the three-month contract - compared with a discount of $20 a tonne in late October.
However, this backwardation has eased from $70 on December 13 as stock dribbles into LME-bonded warehouses to cut costs of holding inventory over year end. Copper stocks have climbed for the last seven sessions, but at 362,725 tonnes, have still dropped by over one third from cycle highs of 555,075 tonnes hit in mid-February.
Consumption in China is expected to be robust in 2011. The latest data on Tuesday showed China's imports of refined copper rose nearly 37 percent in November from a month ago, reversing a nearly 30 percent fall in October. Copper volumes were moderate with over 10,000 lots of the benchmark three-months having changed hands over LME systems.
In wider markets, risk aversion appeared to be pushed to the back burner, even as ratings agency Moody's put Portugal on review for a possible downgrade, as mergers and acquisitions, and rising commodity prices helped stockmarkets to rally. "The euro is not in very good shape at the moment. The US also does not look very good with the monetary easing," said Herwig Schmidt, head of sales at Triland Metals.
Among other metals, aluminium traded at $2,395 a tonne versus $2,378. LME stocks for the metal, used in transport and packaging, slipped 3,325 tonnes to 4.27 million tonnes. Aluminium is the top base metal pick for the next six months, Castlestone Management said late on Monday, with prices likely to hit $2,500 a tonne next year as Chinese smelters cut output. Steel-making ingredient nickel changed hands at $24,650 from $24,550 while battery material lead was seen at $2,461 from $2,440. Zinc traded at $2,310 a tonne from $2,289 and tin was at $26,200 from $26,190.
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