SMM Morning Review - 2011/11/28 Aluminum Market

SHANGHAI, Nov. 28 (SMM) – Italian bond yields surged to new highs last Friday. Standard & Poor’s downgraded Belgium’s debt rating and offered a negative outlook for the country. Mounting worries towards the European debt crisis caused a continuous slip in the Euro while the US dollar index surged to 79.702 supported by its haven attribute. Metals were depressed as a result.

The continuous weak demand for spot aluminum led to stronger short selling. LME aluminum closed at USD 1,992/mt a new yearly low with a position surge of over 24,000 lots. Total positions for the metal increased 24,016 lots to 971,713 lots. The latest LME aluminum stock decreased 2,625 mt to 4,562,675 mt.

The bearish market sentiment will prevail in today’s Asian markets. SMM expects LME aluminum to struggle at USD 2,000/mt and may hit a new yearly low as it fluctuates between USD 1,980-2,020/mt. The most active SHFE aluminum contract 1202 is expected to open lower at RMB 15,700/mt and fluctuate between RMB 15,600-15,850/mt. Weak fundamentals have led to successive losses in spot aluminum. SMM expects spot aluminum to be traded at premiums between negative and positive RMB 20/mt over the SHFE current-month aluminum price. Transactions will be limited due to capital pressures at month’s end.