SMM Daily Review - 2011/9/27 Aluminum Market

SHANGHAI, Sept. 28 (SMM) – Following a three-day decline in SHFE aluminum prices, short selling cooled on September 27th, with the most active SHFE 1112 aluminum contract opening higher at RMB 16,385/mt and struggling at the daily moving average in the morning driven by profit-taking by the shorts. In the afternoon, the contract maintained gains at above 2% supported by bargain hunting by the longs, and finally closed at RMB 16,530/mt, up RMB 260/mt or 2.23% from previous trading day. Positions of the contract decreased 8,056 lots to 109,846 lots. Supported by exiting short capital, the most active aluminum contract fixed the gap in the morning on previous trading day. It also showed stronger stability compared with other base metals. However, due to a lack of further support, the contract is expected to encounter strong resistance at the RMB 16,600/mt mark.

Mainstream traded prices of spot aluminum in Shanghai were between RMB 17,080-17,120/mt on September 27th, with premiums of RMB 150-230/mt over the SHFE current-month aluminum price. In the morning, the most active SHFE aluminum contract opened higher and narrowly fluctuated. The current-month aluminum contract’s several attempts to break through the RMB 17,000/mt mark helped spot aluminum price climb to RMB 17,100/mt. However, after the current-month aluminum current trimmed gains, downstream stock building interest lowered. As a result, a few traders with urgent liquidating needs actively lowered their quotations, dragging down mainstream traded prices. Overall market transactions were moderate. In the afternoon, after SHFE aluminum prices widened gains, goods holders became unwilling to move goods. Inquiries and purchases from downstream and middlemen were also sparse. Mainstream traded prices in the afternoon were RMB 17,080-17,100/mt. As the National Day holiday approaches, market players were gradually exiting the market.