SMM Morning Review – 2011/7/4 Aluminum Market

SHANGHAI, Jul. 4 (SMM) – The Manufacturing Index for June released by the U.S. Institute of Supply Management on July 1 was 55.3, much higher than the expected 51.8. Pessimistic market sentiment was therefore somewhat alleviated. Meanwhile, Greece will get its new round of capital bailout in July, which will help it avoid a default. As a result, the Euro continued its slight increasing trend, while the US dollar index met strong resistance at the moving averages and kept a slight downward trend to finally close at 74.283 points, down 0.3%.

LME aluminum prices slightly rose to USD 2,542/mt on Friday as a result of strong SHFE aluminum price movements at the tail of trading. Later, LME aluminum prices slid twice due to heavy resistance, down as low as USD 2,500/mt. Despite the weakening US dollar index, LME aluminum prices continued its fluctuations in a narrow range. During the end of the trading day, LME aluminum prices slightly rebounded to USD 2,510/mt, down USD 21/mt or 0.83%.

LME aluminum prices are expected to test pressure at the five-day moving average on July 4 and fluctuate between USD 2,500-2,540/mt. SHFE 1109 aluminum contract price is expected to test support at RMB 17,200/mt and fluctuate between RMB 17,200-17,300/mt. As SHFE aluminum prices keep strong, spot aluminum prices are expected to be at premiums of positive RMB 10-30/mt over SHFE current month aluminum prices. Buying interest will increase, but market supply will be relatively limited.

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