Copper Advances to Record on Speculation Supply Shortage Poised to Worsen

Copper futures rose to a record for the fourth time this week as speculation heightened that a supply deficit will widen as China, the world’s biggest consumer, leads a rebound in demand for industrial metals.

The price reached an all-time high of $4.452 a pound as the global economy recovered from its deepest recession since World War II. Supplies of copper, used in wiring and pipes, will lag behind demand by 825,000 metric tons next year, almost double this year’s deficit of 449,000 tons, Barclays Capital says.

The metal “continued to climb as the economy got better and better,” said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $350 billion. “That is very fundamental.”

On the Comex in New York, copper futures for March delivery gained 8.45 cents, or 1.9 percent, to close at $4.447 at 1:16 p.m. In 2010, the price climbed 33 percent, posting an annual gain for the eighth time in nine years.

“Copper has been universally recommended as an investment of choice for 2011,” Charles Bradford, a partner at Affiliated Research Group LLC in New York, said in an e-mail. “We expect good numbers out of China.”

The price climbed 4.4 percent this week, the fifth straight gain. The metal is up 16 percent in December and 22 percent in the fourth quarter.

Refinery Accident

Supply disruptions in Chile, the world’s largest producer, are helping to support prices, along with increased investor demand. An accident at the Chuquicamata refinery curbed output, an official at Chilean government-owned Codelco said yesterday.

Owners of the Collahuasi mine in Chile indicated on Dec. 20 they may not be able to supply all customers after an accident closed down a port on Dec. 18.

On the London Metal Exchange, copper for delivery in three months rose $105, or 1.1 percent, to $9,600 a ton ($4.36 a pound). Earlier, the price reached a record $9,687.

Aluminum, lead, nickel, tin and zinc also advanced in London.

The LME will be closed on Jan. 3 for the New Year’s holiday.

To contact the reporters on this story: Yi Tian in New York at Ytian8@bloomberg.net; Claudia Carpenter in London at ccarpenter2@abloomberg.net

To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net

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