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SMM Daily Review - 2011/9/23 Aluminum Market
Sep 26,2011 09:21CST
price review forecast
Most active SHFE 1112 aluminum contract closed at RMB 16,495/mt, down RMB 495/mt or 2.91%. Spot aluminum mainly traded between RMB 17,050-17,090/mt in Shanghai.

SHANGHAI, Sept. 26 (SMM) – Most active SHFE 1112 aluminum contract gapped lower by over 2% at RMB 16,705/mt on September 23rd due to plunges in global financial markets overnight. The contract slipped slightly in the morning, and fell to a stop with other base metals contracts in the afternoon due to an inrush of short capital. It repeated trading resumptions and stops during following trading hours, but rebounded slightly at the tail of trading on profit-taking by the shorts to finally close at RMB 16,495/mt, down RMB 495/mt or 2.91% from previous trading day. Positions of the contract increased hugely by 13,600 lots to 121,280 lots. Transaction volume of the contract also climbed to over 170,000 lots during the day. SMM expects most active SHFE aluminum contract to test RMB 16,000/mt in the short term. Latest SHFE aluminum stock decreased 10,537 lots to 99,479 lots, therefore the low warrant volume will provide certain support for SHFE aluminum prices.

Mainstream traded prices of spot aluminum in Shanghai were between RMB 17,050-17,090/mt on September 23rd, with premiums of RMB 80-150/mt over SHFE current-month aluminum price.

In the morning, after most active SHFE aluminum contract gapped lower by over 2%, SMM aluminum price plunged by RMB 450/mt in response. SHFE current-month aluminum price temporarily climbed to RMB 17,000/mt in the morning, which helped mainstream price gain, with spot premiums over the contract narrowing to within RMB 100/mt. The wait-and-see sentiment was strong among both suppliers and buyers. Therefore, only traders with sufficient capital moved goods at lower prices, which attracted some downstream enterprises to build up stocks at lower cost. However, as quotations rose later, transactions remained sparse.

In the afternoon, SHFE aluminum soon fell to a stop after its afternoon opening. Though it resumed trading later, its loss was maintained near 4%, and the spot aluminum market turned quiet as a result. The wait-and-see sentiment turned strong among both sellers and buyers. Goods holders became unwilling to move their goods due to limited supply, with only a few quotations at RMB 17,000/mt being reported, and most downstream buyers exited the market being bearish towards future aluminum prices, with no transactions being reached in the afternoon.

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