LONDON (Thomson Financial) – Copper drifted lower as traders viewed poor housing data from the US as a sign of lower demand.
Losses were limited, however, as possible strike action in Peru on Monday loomed.
‘Some weak housing data that came out yesterday just reduced confidence in the market place,’ said John Meyer at Numis Securities. Traders were ‘concerned about the impact,’ the weak data might have in the future, he added.
At 12.39 pm, LME copper for 3 month delivery was down at 7,811 usd a tonne against 7,865 usd at the close yesterday.
US data out yesterday showed new home sales rose by 2.6 pct in March from February to 858,000 units. The market was expecting sales to rise to 900,000 units, after they plunged to the lowest level in nearly seven years in February.
However, strike action in Peru limited falls. Workers at the country’s Ilo copper smelter, operated by Southern Copper Corp, have rejected a wage offer and have said they will strike indefinitely from the beginning of next week.
They plan to join a nationwide protest, organised by the National Federation of Mining, Metallurgy and Steel Workers, against the high level of contract workers employed at mines.
‘Copper, having perhaps discounted the start of the Peruvian strikes, is now in a ‘wait-and see’ mode as participants wait to assess how much impact the strike will have and, most importantly, how long it will last,’ said Edward Meir, Man Financial analyst.
Last week, the price of the red metal surged to seven-month highs on supply fears after workers held a protest for better wages and welfare at Free-port-McMoRan’s Grasberg mine in Indonesia. Grasberg is one of the world’s largest copper and gold mines.
Elsewhere, further declines in existing copper stocks helped provide a floor for prices. The LME said copper stockpiles fell for the fourth day in a row this morning by a further 2,025 tonnes.
In other metals, nickel was down at 46,760 usd a tonne against 47,550 usd amid a large increase in LME nickel stocks. Data out earlier showed LME stocks rose by 210 tonnes or to total 5,052 tonnes.
‘We expect light buying to come in 45,800 usd as participants position themselves for another run to 50,000 usd,’ said Meir at Man Financial.
Although nickel stocks remain at critically low levels, recent inflows into LME warehouses have put pressure on prices, which remain close to record levels.
Elsewhere, aluminium was down at 2,821 usd a tonne against 2,823 usd, lead edged higher to 1,985 usd against 1,982 usd, while tin fell to 13,450 usd a tonne against 13,510 usd.
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