Copper jumped to a record in New York, extending a second annual advance, on speculation that supply will lag behind demand as the global economic recovery gathers pace. Copper for March-delivery on the Comex in New York gained as much as 0.7 percent to $4.4795 a pound, the highest ever for a most-active contract, before trading at $4.4670 a pound. The metal surged 33 percent in 2010 as the global economy recovered from the worst recession since World War II. The London Metal Exchange and Shanghai Futures Exchange are closed today for holidays. “We’re expecting the Chinese come back into the market in early 2011, leading to a rebound in demand and driving a deficit in the global market balance,” said Xin Yi Chen, a Singapore- based analyst at Barclays Capital. Three-month copper in London climbed to a record $9,687 a metric ton on Dec. 31, capping a 30 percent annual gain, as investors sought commodities to hedge against inflation and currency debasement. The metal in Shanghai also rose for a second year, gaining to 72,770 yuan ($11,009) a ton on Dec. 31, the highest price since May 2007. Copper is often used as an indicator for the world economy and sets the pace for other industrial metals because it’s used in construction and electrical applications. Analysts including those at Barclays Capital and Standard Bank Group Ltd. expect a shortage as mining companies fail to keep up with demand as new reserves become harder to find and the quality of ore declines. Copper stockpiles in LME warehouses shrank 25 percent last year, the first annual decrease since 2004. Inventories monitored by the Shanghai Futures Exchange dropped 30 percent from last year’s high of 189,441 tons in April, boosting the demand outlook in China, the world’s largest user. The International Copper Study Group is expecting a 435,000-ton global shortfall in the refined metal this year. “Apart from strong fundamentals, expectations for higher inflation are also driving funds into commodities, and this is likely to drive prices higher,” said Chen. To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

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