Base metals prices mostly trimmed overnight losses to tread into higher ranges. The metals saw a sell-off on Thursday with all except nickel closing in the red as news of the Fed tapering weigh on commodities as a whole.

LME copper suffered its worst declines in more than three weeks yesterday, being the hardest hit metal after the Federal Reserve’s announcement to begin tapering their monthly asset purchases. However, prices bounced back rather quickly today, given that the red metal is still in backwardation, signalling there is a short supply in the near term.

Copper prices at $7,245 per tonne are up $44 on the previous day’s close and continues to find support from the drawdown in LME inventories. In spreads, the cash/threes spread was last offered at $1.50 back.

"The underlying strength in the market is unmistakable despite the depressing macroeconomic pressure. First, the downward movement decisively rebounded after touching strong support at 23.6% Fibonacci retracement level at $7220.45 per tonne. Second, the rebounds are strong,” commented analyst Joyce Liu from Phillip Futures.

Analysts from ANZ also see the fundamental picture for copper as supportive of prices going into 2014 – “We expect copper prices to firm 2.2 percent to an average USD7,500/ tonne in 2014. Despite a relatively strong copper mine supply response expected in the coming year, we see risks on the upside for the bellwether base metal market with a restoration in investor confidence.”

With one of the most anticipated FOMC meeting and announcement now out of the way, markets are expected to remain relatively quiet going into the year-end holidays. There is limited economic data released over the coming weeks liquidity is likely to be thinner over coming sessions.

In the metals, Zinc prices broke above $2,000 to last bid at $2,005 per tonne, climbing $28 as the metal trades near the 4 month high hit 2 days ago at $2,010 per tonne. Aluminium prices at $1,789 were also higher, gaining $12 from yesterday kerb close.

Tin once again hit the key psychological level of $23,000, up $150 from yesterday’s $22,850. Nickel prices bucked the downward trend yesterday, concluding $55 higher at $14,190 after stocks fell 126 tonnes to 255,120 tonnes and continues to tread higher at the current $14,260 per tonne.

Today we will see the first overnight trading session on the SHFE and it might be interesting to observe the added liquidity to LME during the London hours, given that the timing does not seem to be the best – Friday evening and nearing the winter holidays season. The SHFE night session is from 9pm to 1am Shanghai time and will thus coincide with 1pm-5pm UK time.