SMM Daily Review - 2011/11/4 Aluminum Market

SHANGHAI, Nov. 7 (SMM) – The most active SHFE 1201 aluminum contract opened slightly higher at RMB 16,245/mt and saw its gain widening to over 1% in the afternoon supported by short covering. The contract finally closed at RMB 16,380/mt, up RMB 195/mt or 1.2% from the previous trading day. Positions of the contract decreased 1,478 lots to 75,201 lots. Supported by gains in other base metals, the most active aluminum contract consolidated at RMB 16,300/mt, but met resistance at RMB 16,400/mt as longs lacked confidence. SMM expects the most active aluminum contract to test support at RMB 16,200/mt in the short term. The latest SHFE aluminum stock increased 8,614 mt to 121,943 mt. This was mainly because after aluminum prices dropped to the yearly low, some branded aluminum was held for delivery so as to avoid losses when traded in the spot aluminum market.

Traded prices of spot aluminum in Shanghai were between RMB 16,250-16,280/mt on November 4th, with discounts of RMB 0-20/mt over the SHFE current-month aluminum price. SHFE aluminum prices slightly climbed during the day. As aluminum processors in East China had already replenished their stocks at lower prices, purchases during the day’s trading were sparse, with spot being quoted at discounts over the SHFE current-month aluminum price. This in turn weakened the selling interest of high quality aluminum holders. Market transactions were sparse as both sellers and buyers held back. In the afternoon, SHFE aluminum prices widened gains to over 1%, and the wait-and-see sentiment turned strong among goods holders, with goods movements being rarely seen. Only a few transactions were reported between RMB 16,270-16,300/mt in the afternoon. No deal was reached for quotations higher than RMB 16,300/mt. Both sellers and buyers pulled out of the market earlier with the approaching weekend.