SINGAPORE, April 7 (Reuters) Copper touched a record peak on Friday, moving closer towards uncharted territory of $6,000 a tonne, as funds armed with strong fundamentals and dwindling stocks continued to plough into the red-hot commodities sector.
By 0711 GMT, London Metal Exchange copper for delivery in three months was up $24 a tonne from Thursday's London close at $5,802/$5,812 a tonne. It earlier hit $5,830, a record high.
''A test of $6,000 now looks like it is around the corner,'' Edward Meir, metals analyst with Man Financial, said in a daily note.
''While fundamentals are tight in several of the metals, they cannot justify current valuations. Markets are, instead, held hostage by the growing amount of investment and speculative money out there that is increasingly finding its way into commodities.'' Meir said the market might see some weekend profit taking late in the day after copper gained more than 7 percent and zinc rose nearly 8 percent this week.
On Thursday, LME copper gained $68, or 1.2 percent, to close at $5,778. Copper, used in construction and electronics, has gained more than 30 percent this year.
Copper prices have risen four-fold from below $1,400 in November 2001 on strong demand and tight supply after years of under-investment in new mining projects, and as more funds diversified from lower performing assets such as equities and treasuries.
LME copper inventories fell another 625 tonnes to 113,300 on Thursday, equivalent to just over two days of global consumption.
Three years ago, LME copper stocks were about 800,000 tonnes.
The copper market was also supported by a bullish tone from the Fifth Annual World Copper Conference, sponsored by CRU Group, in Santiago, Chile.
FALLING STOCKS China's huge appetite for copper to serve its construction, power and auto industries is expected to continue into the foreseeable future and drive prices even higher, industry leaders said Thursday.
''With delegates to CRU's 5th World Copper Conference in Santiago highlighting the fundamental challenge of responding to strong demand, investors again took their cue from another fall in LME stocks,'' Peter Richardson, chief metals economist of Deutsche Bank, said in a daily note.
On the supply side, Grupo Mexico, the world's number-three copper producer, said on Thursday it could still meet its orders for the metal despite a 14-day strike at its giant La Caridad mine.
''It is still manageable in terms of the contracts we have to fulfil, but if it goes on for more time, the effect could become much more serious,'' Grupo Mexico senior executive Juan Rebolledo told Reuters.
The most active Shanghai contract, June, ended up 470 yuan from the previous close at 53,810 yuan ($6,701) a tonne after hitting a new high of 54,320 yuan.
After the close of trade, the Shanghai exchange said copper stocks in warehouses monitored by the exchange rose only 29 tonnes in the week ended Thursday to 32,126 tonnes, while aluminium stocks rose 795 tonnes to 174,685.
LME aluminium was at $2,613/$2,618 a tonne after gaining $80 on Thursday to close at $2,590. Aluminium earlier rose as high as $2,630, the highest since Feb. 10.
Shanghai's most active aluminium contract, June ended up 610 yuan from the previous close at 20,620 yuan a tonne. It rose to the daily upper trading limit of 20,630 yuan.
In other LME metals, zinc was at $2,837/$2,847 a tonne, against the London close of $2,805.
On Thursday, it hit a record high of $2,855 after LME zinc stocks fell another 2,675 tonnes to 276,650, a new low since June 2001. At the end of last year, LME zinc stocks were just below 400,000 tonnes.
Zinc, used as an anti-corrosive coating in galvanised steel production, has been a star performer in the base metals complex this year, gaining as much as 50 percent on tight concentrates supply and growing demand from the steel sector.
In other commodities market, spot gold edged towards $600 an ounce, touching a quarter-century peak of $598 in early deals, while oil was trading around $67.50 a barrel after it hit a two-month high of $68.20 on Thursday.
* Please see TAKE A LOOK-CRU World Copper Metal Prices by 0711 GMT LME ($/tonne), SFE (yuan/tonne) and COMEX (US cents/lb) Metal Last Net Change Pct Move LME Cu 5802.00 24.00 +0.42 SHFE Cu* 53810.00 470.00 +0.88 LME Alum 2613.00 23.00 +0.89 SHFE Alu* 20620.00 610.00 +3.05 COMEX Cu** 267.50 -0.15 -0.06 LME Zinc 2837.00 32.00 +1.14 LME Nickel 16850.00 -100.00 -0.59 LME Lead 1170.00 3.00 +0.26 Change so far in 2006 Metal Latest bid End prev year Pct Move LME Cu 5802.00 4395.00 +32.01 SHFE Cu* 53810.00 41720.00 +28.98 LME Alum 2613.00 2276.00 +14.81 SHFE Alu* 20620.00 19360.00 +6.51 COMEX Cu** 267.50 204.20 +31.00 LME Zinc 2837.00 1905.00 +48.92 LME Nickel 16850.00 13500.00 +24.81 LME Lead 1170.00 1051.00 +11.32 LME Tin 8400.00 6475.00 +29.73 * 3rd contract months for SHFE copper and aluminium.
** 1st contract month for COMEX copper.
($1=8.03 yuan) REUTERS RA PM1351