US copper futures ended about 4 percent higher on Thursday, driven by funds clamouring to get into industrial assets, as recent US economic data should mean robust demand for metals, energy, and other commodities, traders said.
In a dramatic rally, red metal prices surged to a series of contract peaks as funds bought the latest batch of favourable US manufacturing and construction data, traders said.
"The whole (metals) complex is up. I think it's all new money at the first of the month, fund money. And I think it's going to continue. Maybe not at this pace, but up across the board," said one New York metals dealer.
Comex benchmark March futures on the Comex division of the New York Mercantile Exchange ended at $1.9995 a lb, up 7.35 cents. Just before the close it set a new contract high at the psychologically potent $2.00 per lb.
Spot December copper surged 9.30 cents to close at $2.1680 per lb, near its lifetime high at $2.17 a lb, a 4.58 percent increase. The all-time high for Comex copper was hit on Monday at $2.18 a lb.
Buying was heavy with Comex estimating final copper volume at 22,000 lots, more than the 15,531-lot tally on Wednesday. Gains in US construction spending to a record level in October and a strong November manufacturing index added to healthy US consumption data and to robust readings of third-quarter US GDP, housing data, and durable goods orders issued in the week.
US construction spending rose by a more-than-expected 0.7 percent in October, improving on September's 0.2 percent rise. The November US manufacturing gauge, the Institute of Supply Management's index fell to 58.1 from 59.1 in October.
Though lower, analysts said the ISM index and many of the component readings were still strong and above expectations. Traders suggested that some funds, anticipating the year-end bonus period, might be bidding up prices now.
And, they said, strong fundamental readings accelerate the gains. While a quest for improved bonuses may mean some long positions will be liquidated for profits by year-end, traders said bonuses do not necessarily depend on actual sales.
"It could mean selling, but it's really more of a valuation issue than actual realised profits. They wouldn't necessarily have to sell," said one trader.
Instead, he and others said, with many technical objectives already surpassed it may mean the upside is wide open. "Fundamentals are out the window.
This week, announcements of reduced output from both world's largest producer Chile and the giant copper mine in Indonesia reinforced bullish sentiment.
On the London Metal Exchange, three-month copper shot through a series of key resistance levels to set its newest record at $4,415 a tonne. It finished at $4,366, well up from $4,246 at Wednesday's close.