Base metals recover ground in thin trading

Bnamericas Published: Friday, November 29, 2013

Copper closed Friday at US$3.187/lb on the London Metal Exchange, edging back up from the previous day's US$3.170/lb.

With Friday's close, the average price of copper in November was US$3.205/lb. The red metal is averaging US$3.326/lb so far this year.

Base metals attracted dip buying after falling on Thursday (Nov 28), but with little to drive the market and the US Thanksgiving holiday, trading was thin.

"Markets slumped in mid-week sessions as weak sentiment and technical selling pulled down prices," said Kathleen Retourne of FastMarkets. Aluminum declined to a four-year low and nickel hit a four-month low on Thursday.

"Aluminium, nickel, lead and zinc are consolidating in low ground having breached support levels recently, although they seem to be attracting some dip buying," FastMarkets' William Adams said.

The Shanghai Composite has rebounded by 5.7% over the last two weeks, reversing losses that started in late October, Capital Economics reported in a note. "This reflects a marked recovery in investor sentiment about the medium-term outlook for the economy," China economist Qinwei Wang wrote.

"The detailed plan released after the Plenum showed stronger determination among China's leadership for structural reforms, which are necessary to avoid a sharp slowdown in the economy," she added.

China, which consumes around 40% of global copper production, saw its economy grow 7.8% in Q3 year-on-year. Growth was up from 7.5% in the previous quarter. The official target for 2013 is 7.5%. Some analysts believe the Chinese government will set a lower growth rate of around 7% for next year as the country transforms from investment based to a consumer driven economy.

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