SMM Morning Review - 2011/12/6 Aluminum Market

SHANGHAI, Dec. 6 (SMM) – LME aluminum rebounded from below USD 2,100/mt overnight after Italy approved its new austerity plan and France and Germany proposed adjustment for the EU treaty so that an effective bailout plan can be reached during the EU summit this weekend. The rebound met pressure from weak US manufacturing data and factory orders, however, with the metal finally closing USD 1.5/mt or 0.07% lower at USD 2,127/mt. Total positions increased 1,927 lots to 982,024 lots and the latest LME aluminum stock decreased 4,900 mt to 4,550,075 mt.

Worries towards the European debt crisis will continue to weigh on global markets after Standard & Poor’s warned downgrades for AAA rated euro zone states. As such, SMM expects LME aluminum to struggle near the 30-day moving average and fluctuate between USD 2,100-2,140/mt. The most active SHFE three-month aluminum contract is expected to open above RMB 16,200/mt and fluctuate between RMB 16,200-16,300/mt. The standoff between spot buyers and sellers will continue and spot aluminum is expected to maintain premiums of RMB 10-50/mt over the SHFE current-month aluminum price. Downstream buyers will continue to purchase on an as-needed basis. Deals will be limited.