LME base metals ease on US economic data

Bearish U.S. housing data triggered a flurry of speculative liquidation in copper and the rest of the base metals late Tuesday, with further falls expected overnight, market participants said.

LME copper reversed earlier gains to fall sharply as the markets digested bearish U.S. housing and economic data, traders said.

Existing-home sales took the biggest tumble in 18 years during March as poor weather struck demand. Home resales fell to a 6.12 million annual rate, an 8.4% decrease from February's pace, the National Association of Realtors said. However, inventories of homes fell 1.6% at the end of March to 3.75 million available for sale.

Adding to the downward momentum, U.S. consumer confidence fell significantly in April. The Conference Board, a private research group, said its index of consumer confidence for April moved to 104.0 compared with the upwardly revised 108.2 in March. It was the second consecutive monthly decline and was greater than expected.

In other bearish news, the International Copper Study Group said Tuesday that the global refined copper market was in surplus to the tune of about 40,000 metric tons in January, thereby adding to greater copper price pressure.

Nevertheless, copper maintained its broad range between $7,600 and $8,100/ton, a base metals trader said. If copper prices fall and are unable to hold support at $7,855/ton, then prices could break sharply lower towards $7,400/ton, the trader added.

Over the short term, U.S. funds and investors are likely to continue selling copper lower with Asia also expected to bargain hunt, said a London-based LME broker.

The rest of the base metals and precious metals markets took their cue from copper.

After touching a fresh record high of $50,200/ton earlier Tuesday, speculative liquidation was triggered in nickel as investors took flight from risk, sending prices sharply lower, said the LME broker. Nickel's 10-day moving average of $47,557/ton is seen as the next support, analysts said.

Zinc too fell in line with the general LME complex but held up generally due to declining LME inventories.

In addition, reports that China is considering adopting measures to reduce tax rebates on exports of zinc provided earlier market support. This will help to eliminate the enormous amount of Chinese zinc exports weighing on the international market, analysts said.

China's unwrought zinc exports during January to March increased by 400% on the year to 125,777 tons, according to recent government data, and has been a major cap to upside price potential, some market players said.

In other metals, LME tin held in positive territory around $13,800/ton, although down sharply from earlier highs. Another drawdown in LME inventories Tuesday added to already tight stocks. LME tin stocks have fallen some 10% since the start of April.

Prices in dollar a metric ton.
3 Months Metal     Bid-Ask        Change from
                                 Monday PM kerb
Copper          7800.0-7820.0        Dn  209
Lead            1985.0-1990.0        Up  25
Zinc            3735.0-3740.0        Unch
Aluminium       2839.0-2840.0        Dn  23
Nickel         47600.0-47700.0       Dn  1750
Tin            13650.0-13700.0