COMEX copper futures settled below new all-time records above $4 a lb on Thursday amid a broad-based buying frenzy that triggered a halt in trade after prices spiked to their daily limit, sources said.
"You're just not seeing many signs of reduced demand, which is the underlying impetus for much of this rally," said Dan Vaught, futures analyst with A.G. Edwards.
Copper for July delivery ended up 23.50 cents, or about 6.4 percent, at $3.9230 a lb on the New York Mercantile Exchange's COMEX division, after eclipsing the key $4.00 (a lb) level and climbing to a new life-of-contract peak at $4.04.
Copper futures charged out of the gate Thursday, soaring to their 20-cent maximum daily limit by 8:50 am EDT, which caused the New York Mercantile Exchange to halt trade for 15 minutes.
When trading resumed at 9:05 am, a new 40-cent limit was installed. The last 20-cent limit-up move was on April 25. Spot May rose 24.90 cents to end at $4.0330, after spiking to a new all-time COMEX record at $4.16 a lb. COMEX final copper volume was estimated at 24,000 lots, more than double that of Wednesday's official count at 11,010 lots.
The price of copper in New York has gained almost 110 percent since the beginning of the year amid a constant flow of speculative money coming into the market, fuelled by a bullish backdrop of tight supplies, labour strikes and strong demand, especially from China.
"The weight of new money entering the metals sector is unprecedented and shows no signs of slowing with the evidence of this showing up in yet more broad-based strength across the base metals sector," said Robin Bhar, metals analyst with investment bank UBS.
The parabolic price movement has become a cause for concern, analysts noted, with some comparing the move to the Internet stock bubble of the late 1990s.
"Traditionally, you see a market that's gone parabolic like this you don't know how high it is going to go and you don't really know when it's going to turn, but one thing that is almost certain is that the breakdown will make the rally look like it was in slow motion," Vaught said.
On the fundamental front, Mexican silver producer Penoles, which planned to open a major copper mine last year, said it was unlikely to open it before the end of May. This, after Grupo Mexico's announcement that it would close one of its copper, silver and zinc mines in the state of Zacatecas because of a strike by miners there.
London Metal Exchange-monitored warehouse stocks dropped 2,275 tonnes to 113,650 tonnes on Thursday, while COMEX inventories fell by 315 short tons to 14,250 short tons on Wednesday.
LME three-months copper soared to a new record at $8,800 a tonne, before settling at $8,600, up $530 from Wednesday's kerb close.