China offered the metal markets a glimmer of hope, but both the US and the European economies faced enough uncertainties to leave prices little changed on the week.
The Chinese economy was not only showing modest signs of growth. Official figures showed industrial production rising by 9.6% year-on-year in October, which was more than expected, after rising by 9.2% in September and 8.9% in August. And Chinese exports grew by 11.6% year-on-year in October, after growing by 9.9% in September. But the country’s State Reserves Bureau announced a tender to buy 160,000 tonnes of aluminium from Chinese smelters in the near future, leaving traders speculating and/or hoping that the government agency would also buy some copper.
Barack Obama’s re-election as US president has set aside the risk of some of the wilder economic remedies advocated by some of his Republican adversaries, but the country still faces the so called ‘fiscal cliff’. If nothing is done, the expiry of earlier tax cuts plus the spending cuts envisaged in the Budget Control Act of 2011 could raise taxes and reduce government spending by some $600bn (£378bn). Such a shock could well push the US into recession, thereby hurting other countries. The bitterness of the election does not bode well for co-operation over this matter in Congress.
In Europe, Greece has approved its austerity budget for 2013, demonstrations notwithstanding, and international lenders have agreed to give the country two more years - until 2016 - to meet fiscal targets. But a e31.5bn (£25bn) tranche of bail-out funds has been delayed at least until 20 November, when eurozone finance ministers next meet. In the meantime, Greece will have to borrow e5bn to repay debt falling due as MRW went to press. This is not a good way to reassure markets.
In Germany, the index showing economic sentiment compiled by the ZEW economic research institute fell by 4.2 points in November to -15.7.
Elsewhere, Japan’s GDP shrank by 0.9% quarter-on-quarter in the third quarter of this year, according to official figures. This followed a downward revised rise of 0.1% in the second quarter, and generated concerns that the economy could fall into a mild recession. Weak external demand, namely the global slowdown, was blamed for 0.7% of the decline.