Copper prices hit record high

Copper ore. Photo / Thinkstock

Copper has extended a rally to a record on mounting concern that the global economic recovery will boost consumption of the metal used in cars, homes and appliances while mining companies struggle to increase output.

Freeport McMoRan Copper & Gold, the world's largest publicly traded producer, said the market would be tight in 2011, and for the foreseeable future.

The metal has more than tripled since the end of 2008 on rising demand from China, the world's largest buyer.

In the United States, the second-biggest user, unemployment fell last month to its lowest since April 2009, the Labour Department said yesterday.

"Demand for copper continues to be robust and growing," said James Dailey, who manages US$185 million ($240 million) at TEAM Financial Asset Management in Pennsylvania.

"Bringing copper production online is very costly and protracted, so it may be some time before production levels are able to grow fast enough to offset the growth in demand."

Copper futures for March delivery rose US3.5c, or 0.8 per cent, to close at US$4.5795 a pound on the Comex in New York. Earlier, the price reached a record US$4.614. Its 4.7 per cent rise is the biggest weekly gain since December 3.

Barclays Capital said last month that the global supply deficit would reach 822,000 tonnes this year, more than double last year's shortfall.

JPMorgan Securities and Macquarie Bank also predicted a deficit, and ANZ and Morgan Stanley have boosted their price forecasts.

Copper for three-month delivery added US$120, or 1.2 per cent, to US$10,050 a tonne (US$4.56 a pound) on the London Metal Exchange. Earlier, the metal climbed to US$10,100, the highest ever.

- BLOOMBERG