Oct. 7 (Bloomberg) -- Copper rose to a record in London, heading for its third consecutive weekly gain, as smelter closures and dwindling stockpiles curbed supplies of the metal used to make wiring and plumbing.

Glencore International AG's Mufulira smelter in Zambia closed Oct. 3 because of a shortage of fuel. On Oct. 2, Asarco LLC, the second-largest U.S. copper, shut its Hayden smelter in Arizona for repairs. Inventory monitored by the London Metal Exchange has slumped 15 percent this week.

``The market is very sensitive to any sort of disruption right now,'' said John Meyer, a mining analyst at Numis Securities in London, in a televised interview today. ``Traders are watching this very, very closely.''

Copper for delivery in three months on the London Metal Exchange rose as much as $18, or 0.5 percent, to $3,900 a metric ton, $4.70 more than yesterday's record. The contract was $3 higher at $3,885 as of 11:23 a.m. local time. It has risen 3.1 percent this week.

Before the plant closings in Africa and the U.S., analysts were forecasting that demand would exceed production from mines and recycled scrap. Stephen Briggs, an analyst in London at Societe Generale, estimated a shortfall of 150,000 tons for 2005, in an Oct. 3 report.

To fill the gap consumers may have to rely on stockpiled metal. The total tracked by the LME stood at 70,475 tons, the exchange said today in a daily report. That's equal to about 1.7 days of global usage, said Alan Heap, a commodities analyst in Sydney for Citigroup Inc., in an e-mailed report today.

Shrinking Stockpiles

``Prices for most industrial commodities remain high and generally rising amid low stock levels, healthy demand from China and difficulties in the supply chain,'' said Kona Haque, senior commodities economist at the Economist Intelligence Unit in London, in an e-mailed statement yesterday.

The EIU, a unit of The Economist Group, yesterday raised its average copper price forecast 7.1 percent to $1.275 a pound, citing disruptions and higher demand.

Investment funds are also supporting copper prices as they buy more of the metal. Hedge funds tracking economic trends and funds tracking indexes such as the Goldman Sachs Commodity Index are among investors turning increasingly to commodities, traders said. Index-tracking funds will manage $80 billion by the end of 2005, double the amount in 2004, according to Bloomsbury Minerals Economics, a U.K. consulting company.

Fund Buying

``The index-trackers and macroeconomic funds continue to introduce new funds into the market,'' said Jeremy Goldwyn, head of industrial commodities at London-based broker Sucden U.K. Plc, one of the 11 companies that trade on the floor of the LME. ``There's no question that some of this is speculative froth,'' Goldwyn said yesterday in a television interview.

The amount of copper traded on the LME fell this week, analysts said, leading to higher volatility. A total of 18,635 three-month copper contracts were traded on the LME's Select electronic trading system so far this week, according to data compiled by Bloomberg. Last week 27,399 contracts changed hands.

``The market continues to be pushed about on relatively thin volumes,'' said Angus Macmillan, an analyst at Bache Financial in London, in an e-mailed report yesterday.

Among other metals for delivery in three months on the LME, aluminum was down $7, or 0.3 percent, at $1,885 a ton, nickel dropped $105 to $13,075, zinc gained $1 to $1,455, lead declined $2 to $957 and tin was up $20 to $6,550.

To contact the reporter on this story: Simon Casey in London scasey4@bloomberg.net

Last Updated: October 7, 2005 06:37 EDT