* Consumer stockpiling would be risky
* Inflation not a problem for now but is expected to be
* Governments aware some firms struggling to get metal
By Pratima Desai and Karen Norton
LONDON, Nov 12 (Reuters) - Excess money market liquidity and worries about scarce resources are propelling commodity prices to record highs and prompting talk of stockpiling.
But any such moves by big industrial consumers may aggravate high prices and increase risks for companies, which should seek other ways to secure raw materials such as copper, iron ore and rare earths by moving up the supply chain.
"Stockpiling is competing for scarce resources, and initially at least it will exacerbate what they are worried about -- high prices," said Daniel Brebner, an analyst at Deutsche Bank.
"If more countries and consumers start to stockpile, you are going to see some very high prices ... It's a desire to hedge against future inflation."
Price gains for industrial commodities such as copper accelerated when the U.S. Federal Reserve last week confirmed its intention to buy back $600 billion of government bonds.
On Thursday, benchmark copper on the London Metal Exchange hit a record high of $8,966 a tonne on supply concerns and strong Chinese economic data.
Inflation is not a problem for most countries at the moment, but many investors expect it to become one over coming years as too much money -- brought about by governments pumping liquidity into the banking system -- chases goods and resources.
For consumers, commodity price rises lead to erosion of profit margins, and this is why consumers, producers, analysts and fund managers are giving more credence to the idea of stockpiling.
But there are doubts that corporate stockpiling is a solution for coping with potential price rises, particularly in the present uncertain economic environment.
"If consumers bought too far forward in this climate, they'd be taking a bit of a view on their future order books. They don't tend to be in the speculative field," said William Adams of Fastmarkets.
Instead major metal fabricators should perhaps consider moving up the supply chain to improve their survival prospects.
"If a large conglomerate is fleet of foot, it might decide to go upstream, perhaps through acquisitions or tie-ups," said Graham Deller of industry consultants CRU Group.
SHORTAGE FEARS
The recent concerns about inflation of commodity prices reinforce longer-term fears of supply shortages that provide another compelling rationale for stockpiling.
The potential deficits in metals such as copper are due to a lack of long-term investment in major new mining projects and lower quality ore from existing deposits.
Stocks of copper in London Metal Exchange warehouses at around 363,000 tonnes are down about 35 percent from the year's highs in February.
Governments are becoming increasingly aware that firms in metal-intensive sectors -- the backbone of their industrial output -- are struggling to secure materials such as copper, iron ore and rare earths.
China has been quick to snap up much of the world's remaining rich copper resources, particularly in Africa, where many companies are reluctant to venture due to political risks and lack of infrastructure.
Concerns are especially acute over China's supply dominance in rare earths -- used in mobile phones and wind turbines. Prices are surging as China cuts its export quotas.
The United States and China already have stockpiles of commodities they see as key for local industries, although the U.S. government has been disposing gradually of its metal stocks since the end of the Cold War.
Other countries are seeking ways to help their industries.
Last month, Germany, a major exporter of capital goods, set up a commodity advisory agency to help small and medium-sized companies find raw material supplies.
"Germany is doing this to help ensure German companies remain competitive by having the raw materials they need," said Michael Banks, commodities analyst at Hermes Fund Managers.
"Germany has a large manufacturing base. It doesn't want its companies caught short of raw material and to have their margins squeezed by raw material costs over the next few years."
(Editing by Jane Baird)