SMM Morning Review - 2011/11/15 Aluminum Market

SHANGHAI, Nov. 15 (SMM) – Though a change of government in Italy and Greece helped ease investor worries towards the European debt crisis, the record high bond yield in Italy overnight and veto of Greek opposition party towards the country’s austerity plan reignited investors worries, with the US dollar index rebounding to above 77. Due to strong short selling, LME aluminum erased intraday gains and finally closed USD 7.5/mt or 0.35% lower at USD 2,165/mt as a result. The traded volume added 703 lots while total positions lost 46 lots to 913,861 lots.

SMM expects LME aluminum to meet strong resistance at the 30-day moving average today and fluctuate between USD 2,140-2,180/mt as it tests support at the 5-day moving average. The most active SHFE aluminum contract 1201 is expected to open lower near RMB 16,250/mt and fluctuate between RMB 16,175-16,300/mt as it tests support at the 5-day moving average. During this last trading day for the SHFE current-month aluminum contract, spot aluminum is expected to be traded at discounts of RMB 30/mt to premiums of RMB 10/mt to the SHFE current-month aluminum contract price. Market supply will remain excessive. The traded volume therefore won’t see much improvement.