SMM Morning Review – 2011/11/4 Aluminum Market

SHANGHAI, Nov. 4 (SMM) – The European Central Bank unexpectedly cut its interest rate by 0.25 percentage points overnight to 1.25% as the region’s debt crisis overrode inflation worries. Greek Prime Minister weakened its referendum foothold facing pressures from various sides. The US new unemployment claims data released overnight dropped below the 400,000 mark and the country’s factory orders increased unexpectedly. With support from all these news, the US dollar index erased intraday gains and stayed below 77, which supported rebound of base metals.

As longs were still cautious, LME aluminum only hit USD 2,159.8/mt overnight before finally closing USD 26.3/mt or 1.23% higher at USD 2,152.3/mt. Total positions increased 1,123 lots to 877,795 lots. The latest LME aluminum stock decreased 1,825 mt to 4,544,850 mt.

Investors will focus on the G20 Summit and US non-farm payroll data today. Asian markets are expected to be supported by goods news released overnight. SMM expects LME aluminum to fluctuate between USD 2,130-2,180/mt today. The most active SHFE 1201 aluminum contract is expected to open near RMB 16,250/mt and fluctuate between RMB 16,250-16,430/mt. Spot premiums over the SHFE current-month aluminum price are expected to be RMB 0-40/mt. Purchases will continue to be made on an as-needed basis. Transactions will be moderate.