The base metals were all in positive territory on Wednesday. Copper was flat until just before the New York open yesterday, but then it was off to the races for most of the day, with the metal coming barely off its intraday high to finish at $4.0123/lb., up 10 cents. Nickel had a similar pattern, although it eased more than copper, and closed at $13.1496/lb., up 22 1/3 cents. Zinc had a decent day, ending at $1.0642/lb., up a penny and a quarter. Aluminum went gangbusters, shooting to its intraday high of $1.3802/lb., up more than 5½ cents, while lead soared to its intraday high of $1.3308/lb., up 4½ cents.

Copper surged the most in seven weeks, closing above $4 for the first time and approaching its alltime intraday record price of $4.04, set in May of 2006.

While the uptrend was not completely unexpected, it caught many offguard.

Although global copper demand “remains strong and there are challenges to the industry to provide supplies of copper,” said Richard Adkerson, chief executive officer of Freeport-McMoRan Copper & Gold, “To have copper approaching $4 a pound is remarkable.”

Yes, as Citigroup reported this week, a “tidal wave” of $70 billion has poured into commodity markets this year from hedge funds and other investors.

And there are many who agree with Tobias Levkovich, Citigroup’s chief U.S. equity strategist, who claims there is a commodity “bubble” that is poised to burst.

But it is physical demand, not speculative investment, that is driving copper prices, says Bret Clayton, CEO of Rio Tinto Group’s copper division. “We see a very strong market,” Clayton says. “We are in a very finely balanced market, with very low stock levels.”

Maybe we should just split the difference.

“The main drivers for copper have been in place for some time,” says Ron Goodis, a of Equidex Brokerage Group in Closter, New Jersey. “There’s continuing global growth that’s been pushing demand. When you combine that with the push from speculators, you have this huge move.”

In company news, rumors continued that Baosteel, China’s biggest steelmaker, was on the prowl to acquire a muti-billion dollar stake in BHP Billiton.

And the country’s state-owned aluminum giant, Chinalco, fresh off its partnership with Alcoa in grabbing a major stake in Rio Tinto, said it is not done. It’s actively looking to pick up some more mining assets, particularly in copper.

Asked if Chinalco was looking in South America or Africa for mining projects, Xioaling Ren, the company’s vice president of marketing replied simply: “Wherever possible.”