SMM Daily Review - 2011/12/5 Aluminum Market

SHANGHAI, Dec. 6 (SMM) – The most active SHFE three-month aluminum contract opened slightly lower at RMB 16,240/mt and closed at RMB 16,205/mt, the intraday low. The highest price during the day was RMB 16,280/mt. The transactions volume plunged 7,344 lots to 8,242 lots and positions decreased 2,398 lots to 74,218 lots. At present the contract is struggling above the monthly moving average as it waits for a direction from the news side.

Mainstream traded prices of spot aluminum were between RMB 16,250-16,280/mt in Shanghai. The traded volume slightly rose from last Friday. As SHFE aluminum prices stagnated, spot buyers moved to the sidelines with an a little bit bearish market sentiment. Aluminum shipments to Shanghai remained limited and spot aluminum was quoted at premiums of RMB 20-50/mt over the SHFE current-month aluminum price.

In a recent SMM survey on future aluminum price trends, 70% of market respondents expect this week’s aluminum prices to be stable, 15% expect gains and 15% expect losses. Their different views are mainly based on the final balance between support and pressure. Market support for aluminum will come from a reserve requirement cut to ease capita pressure at aluminum producers and a power rate hike to drive up aluminum production cost, while pressure will come from the weak downstream demand.