London Metal Exchange (LME) copper prices closed sharply up on Thursday, just short of last month's record peak and supported by fund buying on bullish supply news, analysts said.
"We have reports from Chile downgrading production forecasts. That is strong evidence that suppliers are unable to meet demand and that has helped give a push to prices," Barclays Capital analyst Ingrid Sternby said.
Chile's government copper commission Cochilco on Thursday cut its outlook for Chile's 2005 and 2006 copper output and raised its price forecast.
The commission said it saw Chile's 2005 copper production at 5.372 million tonnes, down from a previous forecast of 5.504 million.
Three-months copper closed at $4,008 a tonne, up $57 from the previous kerb close and near a recent record high of $4,018.
The market had shrugged off potentially negative news from China that the State Reserves Bureau would auction up to 20,000 tonnes of spot copper next week and potentially sell 100,000 tonnes.
China has launched a well-advertised plan to sell some of its copper reserves to drive down world prices, but analysts question whether the state agency has the reserves or the will to fully carry it out.
"The market does not believe the SRB holds large stocks and if material is released, I think it will be absorbed," Sternby said.
Man Financial analyst Edward Meir said investors would be watching to see what happens to Shanghai Futures Exchange inventories on Friday.
Copper stocks in Shanghai doubled to 64,840 tonnes last week from late October levels.
"The first clues will be Friday's Shanghai data. If the SRB does have the metal (to deliver) it will show up there," Meir said.
Zinc ended at $1,592/93, up $14, after an earlier eight-year high of $1,600 on fund buying and firmer copper.
Aluminium was at $2,025.50, up $9.50 and homing in on last week's 10-year peak around $2,040.
Nickel was at $11,870, up $20, while lead was at $981, down $2. Tin was at $6,275, up $75.