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SMM Morning Review - 2011/10/10 Aluminum Market
Oct 10,2011 09:50CST
price review forecast
SMM expects LME aluminum to fluctuate between USD 2,170-2,220/mt, the most active SHFE aluminum contract between RMB 16,150-16,500/mt and spot premiums between RMB 130-180/mt.

SHANGHAI, Oct. 10 (SMM) – Though China and the US reported some improving economic data during the Chinese National Day holiday period, the global economic recovery remained out of sight. Investors’ pessimism towards the global economy therefore only saw slight comfort. In the contrary, the spreading and worsening debt crisis in Europe had kept investors’ nerves tight throughout the week.

LME aluminum dropped to a new yearly low at USD 2,130/mt on Monday, October 3rd, which is also the lowest price since September 15th, 2010. The metal later narrowly fluctuated at USD 2,200/mt, and broke through the 10-day moving average on Friday to finally close at USD 2,209/mt, up USD 49/mt or 2.27% from the previous week. Lacking participation of Chinese investors, transactions only broke through 16,600 lots on Monday, and struggled near 10,000 lots during following days. Positions increased 20,000 lots from the previous week.

As the worsening debt crisis in Europe added to the selling pressure for commodities, LME aluminum is expected to drop and struggle between USD 2,170-2,220/mt during today's trading. The most active SHFE 1112 aluminum contract is expected to open lower near RMB 16,450/mt and fluctuate between RMB 16,150-16,500/mt. As investors in the spot aluminum market are cautious due to weak economic momentum, a prevailing bearish market sentiment and strong selling interest among goods holders following increased goods arrivals, spot aluminum prices are expected to meet strong resistance at RMB 17,000/mt on the first trading day after the holiday. Spot premiums over the SHFE current-month aluminum price are expected to be RMB 130-180/mt. Market transactions will be quite limited.

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