SMM Daily Review - 2011/9/9 Aluminum Market

SHANGHAI, Sept. 13 (SMM) -- Most active SHFE 1111 aluminum contract opened slightly higher at RMB 17,455/mt on September 9th, and narrowly fluctuated in the morning session due to a lack of upward momentum on profit-taking by the longs due to remaining high inflation pressure reflected by August CPI data. The contract fluctuated upward to an intraday high of RMB 17,500/mt in the afternoon after the longs took up the dominant position with injected capital and forced shorts to exit. Finally closed price was RMB 17,485/mt, up RMB 60/mt or 0.34% from previous trading day. SHFE aluminum led other base metals to gain in the morning and was the only metal that reported gains on all contracts. Transactions of the most active contract dropped further to near 20,000 lots. Considering output cuts in some aluminum producers in South China, SMM expects most active SHFE aluminum contract to test RMB 17,500/mt in the short term. Latest SHFE aluminum stock decreased 6,449 lots to 111,350 lots. As SHFE current-month aluminum contract is expected to changed next week, more warrants are believed to be cancelled, which will help push up low end prices of SHFE aluminum, thereby making the metal subject to less volatility.

Traded prices of spot aluminum in Shanghai were between RMB 17,850-17,890/mt on September 9th, with premiums of RMB 0-40/mt over SHFE current-month aluminum prices. In the morning, SHFE aluminum not only led other base metals to gain, but also pushed spot aluminum prices slightly higher. Position building was not seen before the coming Mid-Autumn Festival, and goods movements were mainly seen among middlemen. Market sentiment was slightly active. In the afternoon, only a few quotations at RMB 17,850-17,880/mt were seen due to the coming Mid-Autumn Festival, market transactions were also rarely seen. Spot aluminum market in South China was also extremely quiet with only a few purchases seen since downstream enterprises’ orders were reduced due to coming festival. After SHFE aluminum stabilized after a higher opening, spot aluminum price also climbed in the region, which also damped market buying interest.