Base metal prices extended their record breaking run on Thursdasy, while silver and raw sugar prices reached new long-term highs.
Investors continued to pour more funds into commodity markets even though prices have moved beyond the most optimistic of predictions made at the start of this year.
Copper was again the focus in base metals markets with the benchmark three month price rising by more than $130 to a new record of $4,370 a tonne on the London Metal Exchange. More speculators betted that China’s State Reserve Bureau was holding a large short position with an obligation to physically deliver metal this month.
Traders said there was fresh investment fund buying, and dealers who were short were covering their positions. This suggested that investors or consumers had already sold copper at lower prices and were buying the metal to cover their obligations.
The latest move up in copper prices came ahead of a critical few weeks when the market should learn whether the SRB really has a obligation to deliver significant amounts of copper into LME warehouses.
The three month LME aluminium price struck a fresh near 17 year high when it breached the $2,200 a tonne level for the first time since January 1989 on its way to an intra-day peak of $2,208, up $69 on the day.
Aluminium prices were boosted by reports that China may be reducing excess production of aluminium, which in turn may reduce Chinese exports of the metal and tighten the global supply and demand balance. In addition, Rio Tinto has started to cut output at its New Zealand aluminium smelter due to higher power prices.
China has applied similar curbs in the steel and copper sectors to try and limit speculative investment that Beijing believes puts pressure on the country’s environment, drives up the cost of natural resource imports and potentially leads to bad debt.
The three-month LME zinc price hit a new 15-year high when it touched an intra-day peak of $1,765 a tonne, up more than $200 from the previous close.
Lead prices also hit a record of $1,070 a tonne.
Gold moved back above $500 a troy ounce, hitting a high of $502.20, up $8 on the day. Silver hit a new 18 year high of $8.44 a troy ounce.
Oil prices, which had been relatively flat in late trading, picked up near the close with January Brent up $1.10 at $56.15 at the close of London trade. Nymex West Texas Intermediate for January delivery settled at $58.47, up $1.15, a barrel in New York trade.
Raw sugar futures touched a new nine year high of 12.96 cents a pound on the New York Board of Trade. Sugar last traded above 13 cents in July 1996.
