SMM Daily Review - 2011/9/14 Aluminum Market

SHANGHAI, Sept. 15 (SMM) – Most active SHFE 1111 aluminum contract opened slightly higher at RMB 17,400/mt on September 14th. Due to strong bearish sentiment in the market, the contract gradually moved down in the morning, and widened losses in the afternoon after credit rating agency Moody’s downgraded two large French banks to further damp investor confidence on European debt bailout. After hitting an intraday low of RMB 17,250/mt in the afternoon, the contract finally closed at RMB 17,275/mt, down RMB 110/mt or 0.63% from previous trading day. Positions of the contract increased 2,364 lots to 119,854 lots. SMM expects most active SHFE aluminum contract to test RMB 17,200/mt in the short term given prevailing bearish sentiment.

Mainstream traded prices of spot aluminum in Shanghai were between RMB 17,760-17,790/mt on September 14th, with discounts of 0-20/mt over SHFE current-month aluminum prices. In the morning, dropping SHFE aluminum price following a higher opening led to strong bearish sentiment in the spot aluminum market, with purchases rarely seen from downstream and middlemen staying away. Though goods holders lowered their quotations to even discounted prices, market transactions remained extremely limited. In the afternoon, as SHFE current-month aluminum price further dipped and fell below RMB 17,700/mt at the tail of trading, market transactions in the spot aluminum market turned even more sluggish, with only a few quotation seen at RMB 17,700-17,750/mt. Goods holders began to hold goods at this juncture due to huge losses, with transactions rarely seen.