March 8 (Bloomberg) -- Copper prices rose to a 16-year high in New York and touched a record in London on expectations that production of refined metal from the world's smelters will lag demand through June.
Smelters aren't boosting output because some are shut for maintenance, Merrill Lynch & Co. said today in a report. Inventory monitored by the London Metal Exchange has plunged 80 percent in the past year. World supply is equal to three weeks of demand, down from more than six weeks in early 2003, said Jon Bergtheil, an analyst at J.P. Morgan Securities Ltd. in London.
``Anything below four weeks is still a danger zone,'' Bergtheil said. ``There is no doubt that copper is extremely tight in the first half of the year.''
Copper futures for May delivery rose 1.85 cents, or 1.2 percent, to $1.515 a pound at 10:12 a.m. on the Comex division of the New York Mercantile Exchange, after reaching $1.521, the highest since March 6, 1989. Prices are up 17 percent in the past year.
On the London Metal Exchange, copper for delivery in three months rose $43, or 1.3 percent, to $3,287 a metric ton. Prices reached $3,296, the highest since the contract began trading in its current form in 1986.
The copper rally is part of a surge in commodity prices, which are at their highest in 24 years. The Reuters-CRB Index of 17 commodities jumped 7.1 percent last month, the biggest monthly gain since August 1983. The index is up 14 percent in the past year to 310.93 today, the highest since Jan. 1981.
``Everybody wants to be long of commodities,'' said Stephen Briggs, an analyst at Societe Generale in London. Hedge fund managers ``think that the potential returns in commodities are still very high.''
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