SMM Daily Review – 2011/10/19 Aluminum Market

SHANGHAI, Oct. 20 (SMM) -- The most active SHFE 1112 aluminum contract opened slightly higher at RMB 16,450/mt on October 19th. After struggling near RMB 16,500/mt, the contract slipped to an intraday low of RMB 16,370/mt in the afternoon as shorts dominated the market. At the tail of trading, due to profit-taking by the shorts, the contract slightly rebounded and finally closed at RMB 16,435/mt, up RMB 20/mt or 0.12% from previous trading day. Total positions of the contract increased 6,542 lots to 87,854 lots. Transactions of the contract decreased over 30% from previous trading day as investors were cautious towards the global economy. SMM expects the contract to test support at RMB 16,400/mt in the short term.

Traded prices of spot aluminum in Shanghai were between RMB 16,600-16,660/mt on October 19th, with premiums of RMB 10-30/mt over the SHFE current-month aluminum price.

In the morning, spot aluminum prices climbed with a slight rebound in SHFE aluminum prices. However, as downstream demand remains weak, spot premiums over the SHFE current-month aluminum prices narrowed further. Goods holders were standing on the sidelines due to uncertain aluminum price trends. Goods movements were rare. Market transactions were quite limited as sellers and buyers diverged on prices.

In the afternoon, after SHFE aluminum plunged erasing morning gains, goods holders began holding goods. Therefore spot tin prices stayed above RMB 16,600/mt, with premiums over the SHFE current-month aluminum price slightly widening. Market transactions were sparse due to the strong wait-and-see sentiment among downstream buyers.