Funds News

METALS-Copper soars to record on supply worry, fund buys

 * Collahuasi force majeure underlines tight copper supply
 * Chinese import data points to robust demand in 2011
 * Copper ETP sees 850-tonne increase
(Recasts, changes dateline to NEW YORK, adds analyst comments)
 NEW YORK, Dec 21 (Reuters) - Copper prices charged to an
all-time high on Tuesday as shipment delays in top producer
Chile and robust demand prospects in China further felled demand from investors, who have started buying into a new
exchange fund.
 Slow production growth after the recession and unrelenting
consumption from emerging markets has made copper one of the
best-performing industrial commodities of the second half of
the year, boosting it by nearly 45 percent as exchange
stockpiles fell by a third from their February peaks.
 Threats to the metal's already tight supply chain escalated
Monday when the world's No. 3 copper mine, Chile's Collahuasi,
halted shipments of copper concentrate. On Tuesday the mine's
operators were still scrambling to find alternative export
routes after declaring force majeure. [ID:nN21235654]
 And China's imports of refined copper rose nearly 37
percent in November from a year earlier, reversing a nearly 30
percent fall in October and showing no let-up in demand from
the world's top consumer. [ID:nTOE6BJ06G]
 "It's a tight market ... It's probably the tightest metals
market out there from a supply-demand balance," said Evan
Smith, co-manager of the U.S. Global Investors Global Resources
Fund, with about $850 million in assets under management.
 On the London Metal Exchange, benchmark copper for
three-month delivery CMCU3 soared $191 to a record $9,392 a
tonne. It went untraded on the kerb, but was last bid at
$9,365/9,370, up from Monday's close at $9,201.
 On the New York Mercantile Exchange, COMEX copper for March
delivery HGH1 closed up 7.00 cents, or 1.7 percent, at
$4.2760 per lb, near an earlier record at $4.2895 per lb.
 Copper has risen 4 percent over the past three days, its
biggest rally since Dec. 3, although trading volume has dimmed
to around 40 percent below its 30-day average this week,
according to Thomson Reuters preliminary data.
 The latest gains have been given extra kick by the advent
of new exchange-traded funds that could open up the copper
market -- now dominated by the London Metals Exchange -- to
more retail and institutional investors who welcome the ease
and simplicity of buying shares on an exchange.
 The first of three new such funds, run by ETF Securities,
registered a 850-tonne increase in the amount of copper backing
its ETF, taking holdings to their highest level at 1,445.50
tonnes. That is a fraction of the 363,000 tonnes in LME stocks,
but enough to encourage bigger players to pile into the market,
anticipating more to follow. [ID:nN21439955]
 "There has been CTA/fresh fund buying again in copper, but
the market hasn't got much to sell," said one London metals
 Global Investors' Smith agreed, pin-pointing ETF investment
demand as the driver for the next leg up in copper in 2011.
 The gains came despite a mixed showing across the
commodities markets on Thursday, as expectations of Federal
Reserve stimulus aiding gains next year outweighed modest risk
aversion tied to a warning over Portuguese debt.
 Instead copper-specific fundamentals were deemed paramount,
with Collahuasi in talks with officials of the nearby Patillos
port to resume copper shipments from there. [ID:nN21251785]
 Some traders played down the potential impact of the
disruption, given good supplies of concentrate stocks, but it
still boosted sentiment. [ID:nTOE6BK04P][ID:nN21235654]
 "It's temporary, but it seems like many of these temporary
disruptions are keeping a lid on supply while demand continues
to rebound from the 2009 lows," Global Investors's Smith said.
 Among other metals, aluminium CMAL3 closed up $57 at
$2,435 a tonne, having hit its highest level in more than one
month. LME stocks for the metal slipped 3,325 tonnes to 4.27
million tonnes.
 Aluminium is the top base metal pick for the next six
months, Castlestone Management said late on Monday, with prices
likely to hit $2,500 a tonne next year as Chinese smelters cut
output. [ID:nLDE6BJ1PP]
 Metal Prices at 2035 GMT
 COMEX copper in cents/lb, LME prices in $/T and SHFE prices in
 Metal            Last   Change  Pct Move   End 2009   Ytd Pct
 COMEX Cu       427.60     7.00     +1.66     334.65     27.78
 LME Alum      2420.00    42.00     +1.77    2230.00      8.52
 LME Cu        9250.00    49.00     +0.53    7375.00     25.42
 LME Lead      2434.00    -6.00     -0.25    2432.00      0.08
 LME Nickel   24600.00    50.00     +0.20   18525.00     32.79
 LME Tin      26890.00   700.00     +2.67   16950.00     58.64
 LME Zinc      2330.00    41.00     +1.79    2560.00     -8.98
 SHFE Alu     16630.00    80.00     +0.48   17160.00     -3.09
 SHFE Cu*     69250.00   610.00     +0.89   59900.00     15.61
 SHFE Zin     18960.00   270.00     +1.44   21195.00    -10.54
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
 (Additional reporting by Michael Taylor, Melanie Burton and
Silvia Antonioli; editing by Jonathan Leff and Walter Bagley)