NEW YORK (Reuters) - Copper futures surged to record levels on Friday, shooting above $2.00 a lb for the first time ever as tight supplies and inflation worries spurred heavy purchases by funds, traders said.
Supply concerns intensified a day after Chile, the world's leading copper producer, lowered its 2005 and 2006 production forecasts and raised forecasts for prices.
Chile's announcement came with global copper inventories already near historic lows. The market had brushed aside news earlier in the week that more supply would hit the market.
"Today wasn't that shocking. I thought Wednesday was shocking when the news was Asarco (settled a miners' strike) and the China State Reserve was going to be delivering metal, and copper didn't really sell off," said one New York dealer.
"Then people realized that most of that news really was not that bearish. Asarco was producing already, so it's just some incremental tonnage. And with State Reserve, it's a sign of how bullish things really are," he added.
Benchmark December copper at the COMEX division of the New York Mercantile Exchange shot to a new contract high at $1.9060 a lb, settling close by at $1.9055, up 3.40 cents.
Spot November jumped to $2.0010 a lb., the first time ever for a COMEX contract, and ended up 3.40 at $1.9990.
Brokers said some switching business, out of December and into March, was still being carried out on Friday, though most of the attention was trained on tight supply issues.
March copper also set a contract high at $1.8480 a lb, and finished 3.85 cents higher at $1.8460 a lb.
COMEX estimated final copper volume at a heavy 29,000 lots, after a hefty round of buying on Thursday at 27,945 lots.
Bankrupt U.S. copper miner Asarco said on Wednesday it planned to boost copper production to take advantage of record metals prices after striking a tentative deal with workers to end a four-month strike at its Arizona mines.
China's State Reserves Bureau said this week it would auction up to 20,000 tons of spot copper next week and potentially sell 100,000 tons to try to suppress prices.
