copper reaches new record highs

http://af.reuters.com/article/metalsNews/idAFLDE6BC0ZC20101213


* China copper output hits record high in Nov

* Goldman Sachs sees copper above $11,000 in 1 year

* Focus shifts to US FOMC meeting on Tuesday



By Marie-Louise Gumuchian and Melanie Burton

LONDON, Dec 13 (Reuters) - Copper hit successive record
highs on Monday, boosted by economic prospects for top consumer
China, and supply concerns that could propel prices even higher.

Benchmark copper on the London Metal Exchange CMCU3
finished at $9,220, from $8,980 at the close on Friday. The
metal used in power and construction earlier peaked at $9,235.25
a tonne.

Copper's gains also boosted other metals, with nickel
CMNI3 and lead CMPB3 edging to one-month highs.

"Obviously the China outlook is helping copper, but more
than a general story it's very much a (fundamental) copper
story," said BNP Paribas analyst Stephen Briggs.

Base metals have reacted positively to Chinese import data
out last week and the fact Beijing has not raised interest rates
despite climbing inflation. [ID:nBJL002113]

Investors have been watching closely for any policy moves
that would dampen demand in the world's top copper consumer.

Import data from China, which last week showed strong
numbers after a slump in October and the launch of
physically-backed exchange-traded products (ETPs) on Friday have
raised expectations for demand but also worries over potential
price distortions.

These factors, against a mine supply shortfall could propel
the metal to new peaks in the months ahead, analysts say.

"We maintain our 12-mo ahead copper price forecast of
$11,000/mt and believe that prices could spike substantially
above these levels, most likely in late 2011," said Goldman
Sachs in a research note on Monday. [ID:nLDE6BC11U]

However, MF Global analyst Ed Meir noted the risk of
a correction was growing.

"We still believe some trouble could lie ahead, as a rate
rise will have to come through sooner rather than later,
triggering a modest correction in a number of already overheated
commodity markets," said Meir in a research note.

For Tuesday markets are watching the U.S. Federal Open
Market Committee meeting where any moves on monetary policy or
modulations in tone could prove the next major touchstone for
metals, if they impact the dollar. [ID:nL3E6ND06K]

A stronger dollar makes commodities more expensive for
holders of other currencies.


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Bizarre that SMD is still languishing. I expect this one to really improve Jan forwards now that its cashed up with a strong drilling programme planned at new and existing targets