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copper nears record; zinc, lead all-time highs Copper Nears Record as Funds Buy; Zinc, Lead at All-Time Highs
Jan. 16 (Bloomberg) --

Copper traded 0.3 percent short of a record in London while zinc and lead rose to all-time highs as investment funds that track commodity-linked indexes increased purchases.

Pension funds and hedge funds are switching to investments pegged to indexes such as the Dow Jones AIG Commodity Index, which gained 18 percent in 2005. The amount of money in funds tracking commodity indexes may rise 38 percent to $110 billion this year, Barclays Capital said this month.

``Nobody is paying attention to any fundamental news,'' said Angus MacMillan, an analyst in London at Bache Financial, in an interview. ``The funds are still piling in.''

Copper for delivery in three months on the London Metal Exchange rose $1, or 0.02 percent, to $4,616 a metric ton at 11:38 a.m. local time. The contract rose to a record $4,630 a ton Jan. 10, after adding 40 percent last year.

Investors are being attracted to commodities after prices for metals, energy and agriculture outpaced securities such as equities and bonds in 2005. The Goldman Sachs Commodity Index has risen 31 percent during the past 12 months, while the FTSE 100 Index of stocks gained 18 percent.

Fortis Investment Management, the overseer of about $123 billion of assets, said last week it plans to start a commodity fund next month. The Fortis L Fund Commodity World will be based on the Goldman index and initially marketed to investors in Belgium and Luxembourg.

More Chinese Demand

Demand for copper is rising in China, the largest consumer of the metal, on speculation that wire and rod producers will increase purchases before the start of the week-long Lunar New Year holiday this month. Processors need copper to maintain operations during the holiday, which starts Jan. 28.

``I can see they are definitely short of metal,'' Jay Goldstein, president of Montreal-based Lorbec Metals Ltd., said in an e-mailed note on Jan. 14, after visiting rod manufacturers in China. ``The Chinese are not happy with the high prices but they have no choice as they caused the shortages of copper with their big appetite.''

Copper inventories monitored by the LME fell 0.5 percent to 101,850 tons, the exchange said today in a daily report. Stockpiles tracked by commodity exchanges in London, New York and Shanghai are at 168,867 tons, according to Bloomberg data. That's less than four days' global usage.

Copper supply from mines and recycled scrap will lag behind demand by 200,000 tons this year, according to Credit Suisse.

The New York Mercantile Exchange, which handles copper trading on its Comex division, is closed today for Martin Luther King Day.

Zinc at Record

Zinc rose to a record in London for a fourth consecutive trading session. The metal for delivery in three months on gained $24.50, or 1.2 percent, to $2,086. Earlier it traded as high as $2,090 a ton.

The metal advanced last week after a zinc refinery controlled by Grupo Mexico SA was damaged by a Jan. 6 power discharge. The company said Jan. 11 it didn't know when production will resume.

Aluminum, which is used to make beverage cans and car parts, climbed to a 17-year high. The lightweight metal rose $3, or 0.1 percent, to $2,415 a ton and traded as high as $2,424.

Lead rose to a record on the LME for a sixth consecutive day, gaining $18, or 1.5 percent, at $1,222, and trading as high as $1,222. Nickel was unchanged at $14,875. Tin gained $100 to $7,250.