Copper held firm on Wednesday on expectations of robust demand from China, despite US Federal Reserve Chairman Ben Bernanke's comments about the US economy, while tin tumbled more than five percent. Copper for three month delivery in the London Metal Exchange closed at $6,655, down $25 from Tuesday, bouncing back from a session low of $6,602.
Mining shares like BHP Billiton, Anglo American, Xtrata all closed down between half a percent and 1.5 percent alongside with main European FTSEurofirst 300 Index.
"Base metal prices came off after Bernanke's speech but held into positive territory," said analyst Peter Fertig at Dresdner Kleinwort. "It has been the mortgage equity driving the private consumption in the US, which is no longer the case. This implies less possibilities to spend and therefore negative for the US economy."
In remarks to Congress, Bernanke said near-term prospects for the US housing market are uncertain and that developments in the subprime mortgage sector have raised more questions.
The dollar extended losses against the yen on Wednesday, in line with the US stock market's broad weakness, after Federal Reserve Chairman Ben Bernanke said US economic uncertainty has increased.
Fertig said rising demand for copper and supply tightness still squeezing the market were supporting the prices. Chinese refined copper imports hit their highest level in two years in February and banks and brokerage houses like Barclays, Deutsche Bank and Numis Securities has revised up their copper prices forecasts on strong demand seen continuing.
Tin prices, started the day in the negative territory on profit taking, extended losses after Bernanke's speech, plummeting more than 5 percent. Three-month tin on the London Metal Exchange hit $13,800 at the close against $14,595 on Tuesday.
Tin has gained around 20 percent this year on concerns about supplies from Indonesia, the world's second biggest producer. "There was reasonably good turnover on that today, people have been long for a while and probably want to take profit," an LME trader said.
Nickel gained 1.8 percent to $43,400 against Tuesday's $42,600 and lead was up 2.7 percent at $1,900. "There are some market players that want to see the price higher ahead of the end of the month," an LME trader said. Nickel prices have dropped some 12 percent since its high of $48,500 in mid-March, but concerns of further delays at the CVRD's Goro project could limit the downside to prices.
Many fund managers are evaluated at the last day of the month on how well their investments performed and for some investors March is the end of their financial year.
Dealers expected trading conditions to remain thin and volatile ahead of April when fresh fund money is allocated. Lead was also underpinned by tight supplies and Xstrata's force majeure at its Northfleet refinery in the United Kingdom, analysts said. Aluminium ended at $2,750 and zinc gained $20 to $3,200.
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