SMM Daily Review - 2011/12/21 Aluminum Market

SHANGHAI, Dec. 22 (SMM) – SHFE aluminum for three-month delivery opened higher at RMB 15,835/mt and closed at the opening price on Wednesday. Some investors closed their positions for the contract and transactions were only slightly higher than 10,000 lots. Gains of the three-month aluminum contract were limited compared with the same contract for other base metals. While the aluminum contract climbed to above the 5-day moving average, whether it can consolidate at the current level is quite uncertain given weak support for the mark.

Traded prices of spot aluminum in Shanghai were between RMB 16,000-16,030/mt on Wednesday, with discounts of RMB 20-50/mt over the SHFE current-month aluminum price. In the morning, the SHFE current-month aluminum price surged above RMB 16,000/mt with the rebound of LME aluminum prices, but downstream buyers were unwilling to buy at higher prices due to capital pressure at year’s end, with spot discounts expanding to RMB 50/mt. Goods holders were actively moving goods for cash, but held firm at RMB 16,000/mt, resulting in a stalemate between sellers and buyers. Transactions were limited in general. In the afternoon, the SHFE current-month aluminum price was little changed and spot aluminum was quoted firm between RMB 16,000-16,020/mt. Deals were quite sparse as purchases were rarely seen.