Copper prices hit a fresh record high of $3,825.50 a tonne on Wednesday, rallying on fund buying in a market dominated by tight supply, dealers said.
By the kerb close three months delivery copper had eased to $3,786 on the London Metal Exchange (LME), still up from Tuesday's kerb close of $3,780. The premium commanded for prompt delivery over three months copper was around $180 a tonne.
The move followed surging gains in New York, where prices hit new record levels on fund buying after a big gain in US orders for durable goods, pointing to strong demand for industrial metals.
"What's the point of shorting the market when the backwardation is nearly $70 a month?" a fund source said, referring to the premium attached to nearby delivery copper. "The momentum to advance is still there and some investors are not that long, so go with the trend."
Bullish sentiment was cemented by news out of Canada, where major copper and zinc miner Falconbridge Ltd is working to fend off a workers' strike deadline by midnight on Friday.
A union spokesman said much work remained to be done to reach a contract settlement. Fund investment has poured into a basket of commodities recently in a spillover from a strong rally in oil after supply worries were heightened by the hurricanes in the United States.
"Record gains in New York on COMEX impacted the London market," a dealer said.
With the hurricane season not over until late November, metals investors do not want to be caught short, dealers said. And as metals prices have rallied, particularly copper, so have London mining shares.
Antofagasta, Rio Tinto, Anglo American and Xstrata all benefited on Wednesday, as each added more than three percent to be among the FTSE 100's top gainers.
But analysts say copper prices may yet fall back if investors opt to cash in profits before the end of the current quarter on Friday.
Aluminium prices closed at $1,855, down $3, while zinc lost $30 to $1,412. Lead shed $13 to $949/950, while nickel edged up. Tin was down $175 at $6,425/450.
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