Speculative frenzy propels copper to record high

LONDON, May 20 (Reuters): Copper surged to record highs on Monday as a recent rally triggered by short covering created momentum for speculators and funds to bet on higher prices of the metal used in the power and construction industries.
Short positions can be producers hedging their output, but often they are bets on lower prices made by traders and funds.
Benchmark copper on the London Metal Exchange (LME) traded up 2.4 per cent at $10,925 a tonne in official rings after peaking at $11,104.5, a gain of 30 per cent since the start of the year.
"It's a combination of short covering and funds jumping on the bandwagon. It's a similar situation on COMEX," a copper trader said, adding that a "fair amount" of the short covering was by "Chinese players".
"Producer selling seems to have calmed the market a little," he added.
COMEX copper prices also hit an all-time high of $5.1985 a lb, or $11,460 a tonne, because of a short squeeze, where parties are forced to buy back their short positions at a loss or deliver physical copper to close them out.