Copper steadied on Wednesday after slipping almost 2.5 percent in the previous session, with prices underpinned by possible supply disruption in Peru. Copper for delivery in three months on the London Metal Exchange closed at $7,850 a tonne against $7,820 on Tuesday.
The plan on behalf of Peruvian miners to launch a nation-wide strike on April 30 to demand the country's president eliminate outsourcing and improve pension benefits supported prices as the country is the third largest copper and zinc producer in the world.
But copper's failure to match last week's seven-month high of $8,100 and this week's US housing data dampened sentiment. "The residential construction sector is still very weak," economist John Kemp at Sempra Metals said in a report.
Data signalling the US economy is running out of steam is crucial for industrial metals as the United States is one of the world's top consumers. Sales of existing homes in the United States fell by a larger-than-expected 8.4 percent in March, the biggest tumble in more than 18 years.
"It is now unlikely residential construction activity will stabilise before Q3, and no significant recovery should be expected before the end of the year," Kemp said.
But US weakness could be offset by robust growth in China. "The more important factor for global copper demand is Chinese GDP growth, which remains very strong," Dresdner Kleinwort said in a report.
Expectations of strong demand and possible supply disruptions have lifted copper prices 28 percent in 2007 and LME stocks have fallen by 23 percent since early February.
"The market is nervous about what happens in Peru, the possible impact it might have on production, which is a significant amount," analyst Kevin Norrish at Barclays Capital said. In industry news, Freeport-McMoRan Copper & Gold Inc, the world's largest publicly traded copper company, said its first-quarter profits nearly doubled on high metals prices.
NICKEL OFF RECORD: LME nickel ended down $700 at $47,300 after hitting a fresh record of $50,200 on Tuesday. Nickel stocks have fallen by more than 27 percent since the start of the year, with available stocks at less than a day's global consumption at 3,438 tonnes, but up 480 from Tuesday.
"With nickel, the increase in stocks helped it to come down and there is a general malaise today in trading," a trader said. A tight market and strong demand from stainless steel mills have bolstered nickel prices 50 percent since the start of 2007.
POSCO, the world's third-largest steel maker, said it had developed a new type of stainless steel containing no nickel. Zinc was up $20 at $3,740 after hitting a three-month high of $3,830 on Tuesday, while aluminium fell to $2,821 from $2,840. Lead closed down $15 at $1,980 and tin was at $13,500, against its last quote on Tuesday at $13,650/13,700.