November 17, 2014 / 11:19 AM / 4 years ago

METALS-Copper dips after data shows Japan in recession

* Chinese Oct refined copper output up 13.6 pct at 732,746 T

* Philippine nickel ore exports down in Nov -analyst (Updates with closing prices)

By Eric Onstad

LONDON, Nov 17 (Reuters) - Copper and other base metals dipped on news that Japan had slipped into recession, but nickel, aluminium and lead recovered and closed higher, supported by forecasts of developing shortages.

Many metals on the London Metal Exchange fell after news that economic output had fallen for two successive quarters in Japan, one of Asia’s biggest commodity importers.

But losses were limited, and three of the six major LME metals rebounded. Five of them are expected to have a supply/demand deficit next year, with copper the only one seen in surplus, according to forecasts by analysts polled by Reuters.

“On a fundamental basis, we continue to think that metals with deficits will still be able to outperform,” said Nicholas Snowdon, metals analyst at Standard Chartered in London.

“But we remain in a period of heightened macro uncertainty, which is constraining the potential upside to base metals prices.”

Three-month LME copper slipped 0.01 percent to end at $6,704 a tonne after earlier climbing to its highest since Nov. 4 at $6,734 a tonne. In the previous session it gained 0.8 percent.

Concerns about copper supply and higher output from Chinese smelters were highlighted when data showed the country’s refined output rose 13.6 percent in October from a year before.

Aluminium climbed 0.35 percent to end at $2,029 a tonne, while nickel gained 1.41 percent to $15,800 a tonne.

Snowdon was still bullish on nickel, despite a sharp rise in LME stocks this year including a fresh record peak on Monday.

A ban on shipments of Indonesian ore will lead to a deficit next year, while unexpectedly high exports from the Philippines, which have filled the gap and weighed on the market, are dropping off, he added.

“We’ve certainly heard that ore exports have dropped sharply in November so far from the Philippines,” said Snowdon, who forecasts an average LME nickel price of $23,400 next year.

“The main concern right now is the moderation in the Chinese stainless steel sector ... until that starts to turn around, that will be a constraint on the pace of tightening in the Chinese nickel market.”

Zinc dipped 0.04 percent to end at $2,257 a tonne, and tin lost 0.13 percent to end at $19,725 a tonne. Lead ended up 0.49 percent at $2,045 a tonne.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin (Additional reporting by Melanie Burton and Maytaal Angel; editing by Jane Baird)

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