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Copper led the decline of base metals on the benchmark London Metal Exchange on Wednesday, following weak housing and consumer confidence data in the US.
Copper fell two per cent in early trade but recovered to settle at $6,649 a tonne. Nickel and zinc saw declines of 1.37 per cent and 0.53 per cent, settling at $16,230 a tonne and $2,272.5 a tonne, respectively.
This month, consumer confidence in the US unexpectedly declined to a five-month low, as many remained wary of the economy and the labour market. The Conference Board’s Index, which indicates US consumer confidence, fell to 88.7 points in November from 94.1 points in October. The index averaged 53.7 during the recession that ended in June 2009.
“Base metals declined purely on weakening sentiment in the US housing sector, as its demand is closely inter-linked,” said Gnanasekar Thiagarajan, director, Commtrendz Research. The US housing department reported a 2.8 per cent decline in new housing in October. New building permits, however, surged 4.8 per cent. Experts said the large pull-out from the US housing sector resulted in a steep decline in overall sentiment.
The decline in consumer confidence in November disrupts a steady pick-up in sentiment in the US economy. “Base metals prices are likely to remain range-bound in the short term,” said Naveen Mathur, associate director, Angel Broking.
On the Multi Commodity Exchange, copper for delivery in April 2015 fell 0.51 per cent to Rs 417 a kg, with the near-month contract trading at Rs 405 a kg. Nickel for delivery in January was quoted at Rs 1,019.30 a kg, down 1.05 per cent compared to the previous close.
