zinc

Copper, Zinc Soar to Record in London; Aluminum at 17-year High
April 19 (Bloomberg) -- Copper rose to a record in London as supply disruptions and signs of demand growth encouraged fund investors to increase their holdings. Zinc jumped to record for second day and aluminum advanced to a 17-year high.

Grupo Mexico SA, the world's seventh-largest copper producer, can't meet obligations for deliveries to customers in May due to striking workers. The economy of China, the world's largest consumer of metals, grew at a faster-than-expected pace in the first quarter, fuelling expectations of increased metals demand.

``There's nothing out there that signals an end to this rally,'' Jim Lennon, an analyst at Macquarie Bank Ltd. in London said today by phone. ``Supply disruptions and demand growth give funds confidence to keep buying metals.''

Copper for delivery in three months climbed $60, or 0.9 percent, to $6,510 a metric ton at 9:35 a.m. on the London Metal Exchange after reaching $6,545, the highest ever. Prices have gained 16 percent this month. Zinc jumped 2.6 percent to record $3,195 a ton and aluminum rose 2.2 percent to $2,772, a level last seen in August 1988.

Prices have been buoyed by a decline in global inventories and strikes at mines. Grupo Mexico may have to suspend May deliveries of zinc to customers after a two-week strike at its San Martin underground zinc mine in Mexico, spokesman Juan Rebolledo said yesterday. It's losing daily production of about 1,100 tons of copper and won't be able to ship to customers in May due to a strike at La Caridad mine, Rebolledo said April 16.

China Expansion

China's expanding economy is boosting demand for the raw materials needed for factories, houses, cars and appliances. The world's most populous nation had growth of 10.2 percent in the first quarter, President Hu Jintao said over the weekend. The increase exceeded the median 9.6 percent gain forecast in a Bloomberg survey of 26 economists. The economy expanded 9.9 percent last year.

``Supply and demand is terribly out of balance for nearly all commodities right now,'' Jim Rogers, a former George Soros partner who foresaw the start of a commodity rally in 1999, said in an April 17 interview in Singapore. ``This is not a bubble.''

Fund investments in commodities will rise 38 percent this year to $110 billion, according to Barclays Capital, amid speculation their returns will beat those on stocks and bonds. The 13 percent increase in the Goldman Sachs index this year compares with a 4.8 percent gain in the Standard & Poor's 500 stocks index. Benchmark U.S. Treasuries have lost about 1.4 percent, according to Merrill Lynch & Co. indexes.

Alcoa Negotiations

Alcoa Inc., the world's largest aluminum producer, may face production difficulties and reduced shipments should workers strike after their contracts expire this year, the Wall Street Journal reported April 17, citing industry experts. Management of Alcoa and representatives of the United Steelworkers of America are due to meet May 18 in St. Louis to renegotiate the contract for a fifth of the company's 45,000 U.S. workers, the paper said.

Copper stockpiles in warehouses monitored by the LME jumped as much as 7,750 tons, or 7 percent, to 119,050 tons, the exchange said today. That was the largest single-day gain since December 2005. Still, the inventory equals to less than three days of global consumption.

Stockpiles of zinc have plunged 31 percent this year, totaling 270,300 tons, or less than 10 days of global consumption.