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PrintBase metals on the London Metal Exchange have closed in positive territory with technical buying interest seen to be keeping prices elevated throughout the session.
At the close of open-outcry trading on copper, which had wavered the most of the metals, clung to gains, up 0.3 per cent on the day at $US7,806.50 a metric ton.
Analysts tipped $US7,850 a ton as key resistance for copper to overcome in order to pave the way for a leg higher.
Nickel was the standout performer, rising three per cent in the previous session to close at $US16,945 a ton, while aluminium prices also rallied, surpassing $US2,020 a ton for the first time since mid-October.
"The [aluminum] rally over the past three days looks to be more technical in nature rather than reflecting a change in the metal's underlying fundamentals," Leon Westgate at Standard Bank said.
Analysts largely agreed that it was technical buying that was supporting the base metals rather than news of the release of the next tranche of aid to Greece, which they said had been widely expected.
"The base complex seems to have taken heart from the Greek news. However, much of this package was priced in on last week's rally and there's still the important debt buyback coming up," Jack Pollard at Sucden Financial said.
He added that while China stimulus and prospects for the US "fiscal cliff" of automatic tax hikes and spending cuts remain unclear at the moment, they would offer a notable boost if positive outcomes materialise.
Looking beyond this week, others remain less convinced about prices prospects - particularly for copper - in the longer term.
"Even if global risk sentiment remains upbeat, it is unlikely we shall see sustained gains in base metals until there is evidence of shrinking LME and Shanghai-bonded stockpiles of copper," VTB Capital analyst Andrey Kryuchenkov said.
"Most physical players already have enough metal for 2012, while investors will also prefer to wait until 2013. China (demand) will pick up gradually, but we need more evidence like official manufacturing purchasing managers index data, industrial production data," he said.
While BNP Paribas strategist Stephen Briggs expects a copper rally toward year-end, prices likely will suffer and counter the direction of other metal prices as the market moves into surplus in 2013, he said.
The bank cut its estimate of the copper-market deficit in 2012 to just 50,000 tons this week, reducing its supply-surplus forecast in 2013 to 100,000 tons from 250,000 tons.
However, it expects a 450,000-ton surplus in 2014, adding that an even greater surplus is possible in 2015.
"This would represent a substantial change for the copper market after three consecutive years of deficit in 2010-12 that have left global reported stocks low," Mr Briggs said.
Source-Business Spectator
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