Base metals came under pressure in late trading on Tuesday as investors worried that the US housing sector was weakening, analysts said. London Metal Exchange copper earlier touched a session high of $6,330 a tonne but closed lower at $6,220, down 0.7 percent from Monday's close of $6,265.
In New York, copper for May delivery settled down 2.45 cents at $2.8245 a lb on the New York Mercantile Exchange's COMEX division, closer to the bottom of its session range between $2.81 and $2.8720.
"Base metals came under pressure in line with other markets, worried that we might have another risk aversion sell-off after the weakness in the US mortgage market," economist John Kemp at Sempra Metals said.
US stocks tumbled as mounting losses in the subprime mortgage sector caused investors to sell riskier assets. Nickel for three-months delivery on the LME, which hit a new record of $44,750 in early trade, was last quoted at $43,575/43,625, down from Monday's close of $43,800. US retail sales rose only 0.1 percent in February instead of the predicted 0.3 percent, adding to market woes.
The FTSE 100 index lost more than 1 percent by the close and mining companies such as Anglo American, Antofagasta and BHP Billiton followed the move.
Strong demand from stainless steel mills and falling stocks have helped boost nickel prices, which have risen by more than 30 percent since the start of the year.
"People are talking about $50,000 - if we get there, they'll be talking about $60,000. It is possible, but there's so little volume," an LME trader said. Nickel stocks in LME warehouses fell by 72 tonnes to 3,876 tonnes. Of that only 2,490 tonnes - less than a day's global consumption - is on warrant and so available to the market.
"There's no stopping nickel and nobody can forecast the price," said analyst Stephen Briggs at SGCIB. The copper backwardation - the premium for nearby delivery metal over futures contracts - was trading around $23.
"People are very nervous about the spreads, copper is going deeper into backwardation," another LME trader said. World supply and demand of copper will continue to rise in 2007, the Lisbon-based International Copper Study Group (ICSG) forecast on Tuesday.
"Over the past 10 years, Europe's share of global refined copper use has been relatively stable at around 31 percent, although lower demand in the EU has been compensated for by an increase in other countries such as Russia and Turkey," it said.
Lead was softer at $1,850 a tonne from $1,920 on Monday as funds that had driven the metal up more than 5 percent on Monday took profits. Aluminium fell to $2,735 from $2,774 and zinc closed down at $3,210. Tin was untraded in the final kerb session but was last quoted lower at $13,550/13,650 from Monday's $13,695/13,700.
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