The Independent – Fears of an unsustainable bubble in commodity prices were fuelled yesterday after key industrial metals such as copper and zinc surged amid thin trading.<\/p>\n
The copper price leapt more than 3 per cent in London as traders returning from the Bank Holiday rushed to catch up with a strong increase in New York on Monday.<\/p>\n
It jumped by $235, or 3.4 per cent, to $7,235 a tonne compared with Friday’s close. Zinc rose $135, or 4.3 per cent, to $3,310 a ton, within sight of the record of $3,445 hit last month.<\/p>\n
The increases were scored against very thin trading in the absence of buying from China and Japan, the major consuming nations that begin week-long holidays this week.<\/p>\n
“If the natural buyers go away you would expect the market to come off a bit but it’s not happening – it shows you that it’s a financial market, not a market between physical sellers and physical buyers,” one fund manager said.<\/p>\n
The International Wrought Copper Council (IWCC), a trade association for copper users, has written to the Financial Services Authority and the London Metal Exchange (LME) warning about the increasing role of speculators.<\/p>\n
Simon Payton, its secretary general, said the price had been driven up by a “feeding frenzy” by hedge funds. “It may be great for the producers but we feel that a market built on speculation leaves tremendous problems for out side of the industry,” he said.<\/p>\n