SINGAPORE, May 11 (Reuters) Copper raced to a new high above $8,200 a tonne on Thursday as speculative money kept piling into the metals complex on supply constraints and robust global demand, pushing prices in Shanghai and New York higher.
The latest bout of fund buying, prompted by reports this week that China was to set up a strategic reserve for mineral resources, also spurred short-covering and pushed other metals up, with zinc reaching a new high and aluminium setting a new 18-year peak.
By 0423 GMT, London Metal Exchange copper for delivery in three months was up $155, or 1.9 percent, at $8,225/$8,275 a tonne, topping Wednesday's all-time high of $8,110.
''It's a little bit crazy, but the upward trend remains intact,'' said Shen Haihua, vice president of Maike Futures in Shanghai. ''I will not go short at least. I don't know how far we can go from here.'' On Wednesday, LME copper gained $255, or 3.3 percent, to close at $8,075 as investors flocked into the commodities sector, pushing gold above $700 an ounce for the first time since 1980, platinum to record highs and oil above $72 a barrel.
''It's a kind of general frenzy about commodities,'' Shen said.
Some analysts said copper's recent gains were partly due to a misinterpretation of news on China's plan for its strategic mineral reserves.
On Tuesday, the Ministry of Land and Resources was quoted as saying China would set up a strategic reserve for uranium and other important mineral resources and push forward the establishment of strategic oil reserves.
''I think it's a kind of misinterpretation or translation here,'' said a Shanghai-based analyst, who asked not to be identified, adding the ministry would not build up stockpiles, but invest in mines at home and abroad to secure resources.
TIGHT SUPPLY Copper, used in wiring, tubing and coins, has gained as much as 87 percent this year and has risen nearly sixfold since 2001 on strong demand, especially form China and India, and tight global supply amid concerns over supply disruptions.
The metals complex has this year outperformed other traditional financial asset classes, such as treasuries and equities. Investment funds, which have fuelled the meteoric rise in commodities, still expected prices to climb.
On supply news, Mexican silver producer Penoles, which planned to open a major copper mine last year, is still running equipment tests at the mine and is unlikely to open it before the end of May, the company said on Wednesday.
But with lower grade ore in Indonesia and ongoing labour disputes at mines in Mexico and elsewhere lent support, while shortages of skilled labour and mining equipment were hampering efforts by producers to bring on new capacity.
With gains in LME copper, Shanghai copper futures jumped by the daily trading limits to a record for the fourth straight day and copper futures on the New York Mercantile Exchange's COMEX division set new highs.
Shanghai's active July contract rose 5 percent, or 3,780 yuan, from the previous settlement to end the morning session at 79,490 yuan ($9,924) a tonne. It was also up 3,380 yuan from the previous close.
COMEX copper for July delivery rose 6.60 cents to a new contract high of $3.7540 a lb, before easing to $3.7460.
Shanghai aluminium futures also rose by their daily limits, with the most active July contract up 4 percent, or 900 yuan, from the previous settlement to close the morning session at 23,470 yuan.
LME aluminium was up $20 at $3,115/$3,125 a tonne, topping Wednesday's 18-year high of $3,100, while zinc was unchanged at $3,660/$3,700 a tonne, a record peak.
In the mining sector, the world's top miner BHP Billiton rose 1.3 percent to A$31.75 and Rio Tinto gained 1.2 percent to A$86.75, while Zinifex Ltd., the world number-two zinc miner, was up 3.6 percent at A$13.23.
Metal Prices by 0423 GMT LME ($/tonne), SFE (yuan/tonne) and COMEX (US cents/lb) Metal Last Net Change Pct Move LME Cu 8225.00 155.00 +1.92 SHFE Cu* 79490.00 3380.00 +4.44 LME Alum 3115.00 20.00 +0.65 SHFE Alu* 23470.00 770.00 +3.39 COMEX Cu** 383.50 5.10 +1.35 LME Zinc 3660.00 0.00 +0.00 LME Nickel 20250.00 -200.00 -0.98 LME Lead 1320.00 8.00 +0.61 Change so far in 2006 Metal Latest bid End prev year Pct Move LME Cu 8225.00 4395.00 +87.14 SHFE Cu* 79490.00 41720.00 +90.53 LME Alum 3115.00 2276.00 +36.86 SHFE Alu* 23470.00 19360.00 +21.23 COMEX Cu** 383.50 204.20 +87.81 LME Zinc 3660.00 1905.00 +92.13 LME Nickel 20250.00 13500.00 +50.00 LME Lead 1320.00 1051.00 +25.59 LME Tin 9425.00 6475.00 +45.56 * 3rd contract months for SHFE copper and aluminium.
** 1st contract month for COMEX copper.
($1=8.02 yuan) REUTERS CS SSC1051