October 7, 2015 / 1:25 AM / 5 years ago

METALS-London copper climbs in thin trade, China holiday end nears

* BNP Paribas recommends short aluminium against long other metals

* Copper market to swing into small 130,000 T deficit in 2016-ICSG

* German industrial output falls at fastest pace in a year in Aug (Adds comment, detail, updates prices)

By Melanie Burton

MELBOURNE, Oct 7 (Reuters) - London copper climbed in thin trade on Wednesday as the end to a week of holidays in top consumer China neared, and an industry group revised its expectations from a surplus next year to a small deficit.

A string of output cuts at copper miners in the past few months has provided fragile support for metals prices beaten down by sluggish demand growth in China, but analysts say more cuts or stronger demand are needed to boost prices.

“The demand side is still soft. We’re reasonably confident we’re not going to see any significant bounce back in prices ... unless we hear anything new and significant on the supply side,” said analyst James Glenn at National Australia Bank in Melbourne.

Three-month copper on the London Metal Exchange rose 0.8 percent to $5,224 a tonne by 0637 GMT after closing little changed in the previous session. Prices have failed to make much headway from six-year lows below $5,000 touched late in August.

The Shanghai Futures Exchange was closed and will reopen on Thursday Oct. 8.

U.S. exports took a hit from an ailing global economy in August and imports from China surged, fuelling the largest expansion of America’s trade deficit in five months.

The International Monetary Fund cut its global growth forecasts for a second time this year on Tuesday, citing weak commodity prices and a slowdown in China and warned that policies aimed at increasing demand were needed.

The global refined copper market is expected to see a small deficit of around 130,000 tonnes in 2016, compared with a prior estimate of a 230,000-tonne surplus made in April this year, the International Copper Study Group (ICSG) said on Tuesday.

Chilean copper mining company Antofagasta Minerals said on Tuesday it was reducing its workforce by around 7 percent in order to cut costs, the latest victim of the recent rout in the copper market.

Given that aggregate base metals prices have already halved since early 2011 and the global economic and demand picture is less grim than 2008-09, BNP Paribas advised against taking an aggressively negative price view on metals.

It expects growth in world base metals demand to slow to 2 percent in 2015 from 4.5 percent 2014, but sees growing picking up to 3 percent next year.

BNP Paribas recommended taking a short position in aluminium versus a long position in a basket of the four smaller base metals.

In news, German industrial output fell in August at its fastest pace in a year, data from the Economy Ministry showed on Wednesday, suggesting that the economy may be losing momentum in the third quarter.


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

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

Editing by Ed Davies and Richard Pullin;

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