US copper futures vaulted to all-time highs at the close on Wednesday as worries over global supply disruptions and declining warehouse inventory levels continued to fuel the funds' appetite for the red metal, sources said.
"The funds continue to be the driving force behind this rally. The fundamentals are supportive ... with supply/demand issues and labour issues all over the world, but in the end it's the fund money that will dictate direction," said one Comex dealer.
Copper for May delivery ended the day up 6.05 cents, or nearly 2.4 percent, at $2.5960 a lb, on the New York Mercantile Exchange's Comex division, after hitting a new life-of-contract peak at $2.60 near the end of the day.
Spot April shot up 5.45 cents to close at a new all-time record for the Comex spot contract at $2.6280.
Deferred or back-month contracts ended 5.05 to 6.15 cents firmer. Comex final copper volume was estimated at 15,000 lots, close to Tuesday's official count at 14,371 lots.
Brokers noted that while there was nothing fundamentally new in the market, the tone from the Fifth Annual World Copper Conference, sponsored by CRU Group in Santiago, Chile, was very bullish and was probably adding to the market's firmer sentiment.
From the conference, Collahuasi, Chile's third-largest copper mine, expects to produce 440,000 tonnes of copper this year, close to what it produced in 2005, Tomas Keller, the mine's chief executive, told Reuters on Wednesday.
Also, Chilean mining company Antofagasta Plc estimated on Wednesday it would produce 440,000 tonnes of refined copper this year. Another hefty decline in London Metal Exchange warehouse stocks has brought the two-day total drop to almost 7,000 tonnes, and has added to the market's upward momentum.
LME copper warehouse inventories fell 2,275 tonnes to 113,925 tonnes on Wednesday, while Comex copper stocks were down 558 short tons at 20,109 short tons on Tuesday's data. "However with stock draw-downs gaining momentum in most of the metals and with consumers likely to be gearing up ahead of the summer slowdown, physical demand should be gaining momentum.
This, and ongoing concerns over supply, are likely to underpin prices, so unless some external event upsets the funds, the upward trends are likely to keep prices on the rise," said William Adams, metals analyst with BaseMetals.com.
On the supply-side, striking Mexican miners and steelworkers on Tuesday called on President Vicente Fox to intervene in an 11-day-old dispute.
Meanwhile, India's copper consumption rose 7 percent in the fiscal year that ended in March, nearly double the world average, government data showed on Wednesday.
LME three-month copper closed the kerb at a new all-time record at $5,710 a tonne, up $168 from the previous kerb close.