Base metals market hope for new year comeback

Columns | 2011-11-30 06:57:21

Emerging markets are witnessing a phase of downturn in the recent months which has already hit the industrial activity and in turn the base metals complex

By Paul Ploumis

By Truemon Thottathil

LONDON (Scrap Monster): Emerging markets are witnessing a phase of downturn in the recent months which has already hit the industrial activity and in turn the base metals complex.

The last three months showed remarkable price declines in the whole base metal complex.

In the above period LME base metals complex declined with value loss ranging between 8.5 for tin and up to 15.2 per cent for copper and nickel.

A recent report by BNP Paribas suggest that after falling about 10% between the first and third quarters, aggregate average base-metals prices may decline by over 10% again in the fourth quarter.

China’s - the biggest consumer of all sort of metals - purchasing managers’ index (PMI) fell to 48 in November from October’s 51, lowest level in 32 months, reflecting signs of a domestic economic slowdown.

The contraction of China’s manufacturing sector has further fuelled the investors’ concern who were already worried of a global recession amid struggling U.S. economy and the rampant debt crisis in euro zone.

India's industrial output grew at its slowest pace in two years in September, providing further evidence of deceleration in the economy.

Brazil’s economy expanded at the slowest pace in 10 quarters in the three months through September after policy makers curbed bank lending and raised interest rates to rein in inflation.

China was the predominant hot spot in metal market, a let down in euro zone or even a weaker data from U.S. may not demotivate the market much, but as the Chinese market is gearing down, base metals are estimated to revive only by the beginning of 2012, when the global market is estimated to face a short supply.

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Base metals market hope for new year comeback

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